Monthy Updates
I reassessed my thesis in NH after the Supreme court ruling. I don’t like to be a guy holding a company when fundamentals have deteriorated(the contra guy). Hence tried to analyse the NH again in response to the supreme court ruling.
THE CLINICAL ESTABLISHMENTS (REGISTRATION AND REGULATION) ACT, 2010
THE CLINICAL ESTABLISHMENTS (REGISTRATION AND REGULATION) ACT, 2010 talks about transparency in prices instead of fixing of prices.
The only short term negative is that if the government will not be able to come to that price range to be charged, the supreme court might enforce the CGHS rates which can destroy the hospitals economics.
Though that thing will be temporary in nature until and unless the government fixes the price based on region.
The implementation of the CGHS price can not be the terminal status even if implemented, it can just be a temporary status as CHGS rates are very low and unaffordable for the hospitals to operate profitably.
I am also in favour of giving people good healthcare but the things should be sustainable.
This thing might impact the hospitals like Max or Medanta though.
Probability of impact on NH looks low
- Many NH hospitals are running at scale
- NH charges less prices of its procedures and surgeries compared to other hospitals(Still in verification)
- More than 50 percent of the profits of NH comes from Cayman Island
Ref 1 → https://www.indiacode.nic.in/bitstream/123456789/7798/1/201023_clinical_establishments_(registration_and_regulation)_act%2C_2010.pdf
Ref 2 → Price transparency puts hospitals in trouble
Revenue growth of 6 percent YoY in NH
The lower revenue growth in NH seems to be due to disruption in North and West which is a temporary and does not change things substantially when the demand is concerned.
I think considering the management is honest and ethical, I can live with it.
Syngene reassessment
- Syngene never discloses the amount of the drugs that are in different phases in clinical trails which makes their business difficult to understand and less transparent. Low transparency is not directly proportional to the good and ethical managment.
- Then there is the concept of the Group CEO which I am unable to digest.
- If there is not more scope to earn more than 20 percent in direct stocks, it is better to put that money in mutual funds.
Out of all the stocks that I hold, it is the lowest conviction stock that I hold.
Some positives are industry structure and better and informative annual report(increases transparency) when compared to other companies. They also reply to questions raised in investor emails sometimes which is good(increases transparency).
Mutual funds updates
The things I am doing is more towards increasing more percentage of my net worth towards direct Indian stocks.
I have closed the SIP of my mutual funds since more than 1 month now.
Reason is that since few months I have been skipping SIPs for direct investment in stocks like Neuland and Kama Holdings and putting directly certain percentage in SGB and Arbritage.
Hence it made more sense to close the SIP.
On the day where the small cap lost 5.5 percentage on single day, I sold 2-3% of my networth in smallcap to come in cash. Reasons
- To limit my drawdown
- Canara Robeco small cap is not doing too good a work when compared to other mutual funds to limit the drawdown
- To prepare money for buying direct stocks
I have been holding more than 20 percentage in fixed assets like Gold and Arbritage since few months now.
Direct Stocks Update
I have not bought anything or sold any anything.
Peculiar behaviour
Sometimes, when I think the market is overvalued, I put money in NPS. This month also I put more than 40% of my investible salary in NPS. I have put money in NPS 3-4 times in this financial year.
Reason are the NPS has very long horizon, invests mostly in large cap and to let my investment in equity going on.
My Pension fund manager of NPS is Kotak and I have 75% invested in equity.
I always try to be aware that I can not guess the market and hence take decision based on it.
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