The first noteworthy aspect is that PPFAS Mutual Fund, in which Parag Parikh and the other top brass have invested sizeable funds, has managed to collect a corpus of Rs. 152 crore. Now this is quite commendable given the moribund state of the stock markets and the common man’s abject apathy towards stocks. If Parag Parikh runs a tight ship, he should be able to break even or even eke out a small profit.
The second noteworthy aspect is that Parag Parikh has made a sensible selection of stocks spread across a diverse range of sectors. While some of the stocks are sluggish performers and may not turn into multibaggers, they won’t sink like a stone either in the event of a market crash. Evidence of this can be seen in the fact that while the Indices have plunged 5.15% in the past one month, the PPFAS Mutual Fund has lost only 1.05%.
Prominent amongst PPFAS’ holdings is Parag Parikh’s old favourite Noida Toll Bridge. Parag Parikh fell in love with Noida Toll Bridge when he heard Warren Buffett extoll the virtues of a Toll Bridge as an ideal investment. Warren Buffett’s logic was simple. A toll bridge has a one-time fixed cost but its’ revenues are recurring and ever increasing. However, what makes a good investment in the text book does not necessarily mean a good investment in real life as Noida Toll Bridge’s embittered investors will testify. Anytime Noida Toll Bridge proposes to hike the toll rates, it gets collared by the local politicians and activists. Noida Toll Bridge consequently wisely prefers to keep a low profile and so has its’ stock price.
Parag Parikh’s second stock pick, Standard Chartered IDR, is also intriguing. Given that there are so many top-quality private Banks in India (HDFC Bank, IndusInd Bank, Yes Bank, ING Vysya etc), why would anyone want to buy a Bank operating in the saturated and sluggish European economy? Probably, the idea is seek safe harbour in foreign markets if the Indian economy sinks further. In fact, nearly 14% of the Fund’s holdings are in overseas securities.
Holdings Of PPFAS Mutual Fund As Of June 2013
| Name | Sector | % of Net Assets |
| ICRA Ltd | Credit Rating | 5.42% |
| Maharashtra Scooters Ltd | Auto | 5.39% |
| Noida Toll Bridge Co Ltd | Infrastructure | 5.30% |
| Indraprastha Gas Ltd | Utilities | 5.00% |
| IL&FS Investment Managers Ltd | Asset Management | 4.95% |
| Gujarat Gas Ltd | Utilities | 4.86% |
| AXIS Bank | Banking | 4.75% |
| Mphasis Ltd | Information Technology | 4.68% |
| Mahindra Holidays & Resorts India Ltd | Hotels | 4.26% |
| Polaris Financial Technology Ltd | Information Technology | 2.06% |
| Jammu & Kashmir Bank | Banking | 1.51% |
| Novartis India Ltd | Pharmaceuticals | 1.01% |
| Special Situation / Arbitrage | ||
| Hindustan Unilever Ltd | 6.64% | |
| CRISIL Ltd | 5.00% | |
| Bharti Airtel Ltd* | 5.17% | |
| Total | 66.00% | |
| Overseas Securities & IDRs | ||
| Standard Chartered PLC IDR | 4.55% | |
| 3M Company# | 4.87% | |
| Nestle SA ADR# | 4.78% | |
| Total | 14.20% | |
| Debt Securities | ||
| Treasury Bill (Maturity Date : 01/08/2013) | 9.13% | |
| Invested total | 89.32% | |
| Cash & Cash Equivalent | 10.67% | |
| Net Assets | 100.00% | |
* Hedged by offsetting Derivative position
# Currency hedge to the extent of approximately 90% of exposure.
Standard Chartered gave its investors a big scare in August 2012 when it tumbled 20% over fears relating to the conversion of the IDRs. However, it has been a steady performer stock giving 22% return over 24 months.
Mphasis is another of Parag Parikh’s favourite stocks that has flattered to deceive. When Mphasis became a subsidiary of the multi-billion dollar Hewlett Packard, Parag Parikh was convinced that he was looking at his next multibagger pick. However, the reverse happened because Hewlett Packard squeezed Mphasis’ margins and sent its fortunes into a tail spin. Ironically, Mphasis perked up when news filtered out that Hewlett Packard was planning to sell its’ holding.
One more noteworthy aspect is that though Parag Parikh extolls the virtues of long-term investment, he is not averse to making a quick buck when the opportunity presents itself. This is reflected in the “special situation/ arbitrage” holdings of the PPFAS Mutual Fund. Prominent amongst these is Hindustan Lever which delighted its’ shareholders over the Unilever Open Offer. CRISIL also gave quick-fire gains over the McGraw open offer. A surprising entrant here is Bharti Airtel Ltd which is supposed to be “Hedged by offsetting Derivative position“. I can’t figure out the logic of this stock pick.
Yet another noteworthy aspect is that Parag Parikh has kept a concentrated portfolio with only 18 stocks. Also, the Fund has nearly 20% in cash and debt which gives it plenty of gunpowder in case of a further dip in prices.
really mind boggling selection of stocks. looks as if PPFAS is destined to become the next JM Mutual Fund…..Investors….stay away!!!!
why to stay away !!! i think its good contarian and defensive bets……… we have to wait & see..otherwise.
totally concur wsith ashujeet, It shows he is in the mkt and seasoned investor
1)Noida toll bridge. Those in the mkt knows how consistent the performance this counter so too its beta,
2)Mphasis_ except two years back its performance and bottomline to the south
3)Polan technology_ i have not heard of this stock= But that does not make it unworthy…. but still
4)those in the mkt since 1980s knows the Maharastra scooters was in the limelight in 1980s and90s , if not mistaken a co with a very small equity capital,
5) Guj gas, gud but have not given steady returns
5)i&lfs managers, gud penny stock with high betar
6)Intead of Novartis, glaxo smithkline consumer if they luk at defense with appreciation or dr reddy at historic high today too or our midcap ipca or glen pharma would do better
Postives
Mahindra Holiday_ can do v well,
Jam kashmir, Axix Bank, gud growth stock
Hind lever, Badshah of Dalal street
NO bias, nothing personal, refered my view about the stocks only
These fund will not even beat Fixed deposits, nor it will go down for at least 2 years.
well concentrated this portfolio.why u r saying good ( mahindra holiday, JK) jacob
@satish, i have clearly mentioned my unbiased view being in capital market very much as a investor ( not as an analyst as they cannot invest nor most donot invest too hence does not know the jerk pull and push and pressure associated whilst invested)
Mahindra holiday is a growth scrip for the next two years
Jk bank and axis bank are defensive stocks with a growth bias…
I CAN SAY FROM ROOF TOP THAT RISK REWARD IS 2.5:1
i refered of the value buying based on beta
reward or return is something else, a bad porfolio too might do well in an exception ally cats and dogs last leg of the bull mkt.
if pentafour sofarwar can be blue chip
these twoo are blue chip
valuation based
on roce, debt equity, consistent and enhanced uninterrupted divided over 15 yrs, cash flow, mgt integrity, in business for over 20 yrs, no frequent vistor to capital mkt, not involved in politics or controversies are the yardsticks i apply before shorlisting
you have all right to differ and i rever it
PP is a value picker
Rj has bought alphageo too , will you buy that
if you are a seasoned long term i nvestor with over 15 yrs standing one can follow ones own .. rather than following …
@satish, i have clearly mentioned my unbiased view being in capital market very much as a investor ( not as an analyst as they cannot invest nor most donot invest too hence does not know the jerk pull and push and pressure associated whilst invested)
Mahindra holiday is a growth scrip for the next two years
Jk bank and axis bank are defensive stocks with a growth bias…
I CAN SAY FROM ROOF TOP THAT RISK REWARD IS 2.5:1
i refered of the value buying based on beta
reward or return is something else, a bad porfolio too might do well in an exception ally cats and dogs last leg of the bull mkt.
if pentafour sofarwar can be blue chip
these twoo are blue chip
valuation based
on roce, debt equity, consistent and enhanced uninterrupted divided over 15 yrs, cash flow, mgt integrity, in business for over 20 yrs, no frequent vistor to capital mkt, not involved in politics or controversies are the yardsticks i apply before shorlisting
you have all right to differ and i rever it
PP is a value picker
Rj has bought alphageo too , will you buy that
Hi Jacob,
I too have been holding Noida Toll Bride for a long time, but not gaining out of it. Lost money in Gujart Gas and many other scrips which had a long dividend record, consistant performance etc.
We would like to know your favourite 15-20 scrips as a seasoned investor.
PP is a value investor. Hence you can find these picks in his portfolio.Stocks mentioned in comments sections are either growth stocks/over valued. Time will tell whether PPFAS is correct or not.