Porinju reveals earnings of PMS Fund in Q1FY19
Porinju’s statement in his letter to his PMS clients that he is “baffled” at the “extent of erosion of portfolio value in such a short period” sparked panic amongst his fans and followers that there has been a meltdown in the PMS.
All sorts of wild rumors were spread as to the extent of loss suffered by the PMS.
To allay the fears, Porinju has now revealed the performance figures of the PMS.
No strategy is evergreen, equity investors have to go through good and bad times to create long-term wealth. Sharing EQ performance on popular demand? pic.twitter.com/RhNaMlciKx
— Porinju Veliyath (@porinju) July 4, 2018
As one can see, the PMS has underperformed in FY18 and also in Q1FY19.
In FY18, the Fund was able to churn out only 9.42% while the Nifty and BSE 500 outperformed with returns of 10.25% and 11.82% respectively.
The underperformance is starker in Q1FY19 with the PMS Fund suffering a loss of 18.54% even though the Nifty and BSE 500 delivered gains of 5.93% and 2.85% respectively.
However, there is out-performance if one looks at the scenario over longer periods of time.
Prima facie, the reason for the present underperformance is the concentrated positions taken by Porinju in LEEL Electricals, Kaya and VA Tech Wabag, all of whom have lost big chunks of their valuation in the ongoing correction.
These stocks will have to surge significantly for the out-performance of the past to return to the PMS.
The heartening aspect is that Porinju’s PMS clients are not discouraged by the underperformance. Instead, they have pumped in more funds.
Retail investors are gaining wisdom & common sense! Equity Intelligence too witnessed net fund-inflow during the panic months of May & June. https://t.co/QGYXDp5CWi
— Porinju Veliyath (@porinju) June 29, 2018
Strategy of betting big on “chor” companies has backfired
Porinju candidly admitted that the reason for the underperformance in the PMS Fund is because his strategy that “chor” companies would reform and turn a new leaf has not fructified as yet.
“I have bet big on improving corporate governance in a structurally changing Indian economy; the strategy looks backfired as of now,” Porinju said in a rueful tone.
“It is true that many chor promoters still find loopholes during the transition period,” he added.
A Rule-Based Economy cannot be built overnight! Change is a painful and time-consuming process. It is true that many chor promoters still find loopholes during the transition period.
— Porinju Veliyath (@porinju) June 28, 2018
Forget high-quality blue-chip stocks. Even SSC pass can buy them
As far back as in Jan 2015, Porinju had made it clear that he is contemptuous about investing in blue-chip stocks.
“Buying a famous ‘performed’ blue chip stock, with great management, clean BS and excellent growth business, doesn’t need any skill,” he had said.
Buying a famous ‘performed’ blue chip stock, with great management, clean BS and excellent growth business, doesn’t need any skill.
— Porinju Veliyath (@porinju) January 5, 2015
Later, he made good his assertion by pointing out that while the so-called blue-chip stocks like HUL, Nestle, ITC and Colgate had languished and delivered paltry returns, FCEL, their desi counterpart, had delighted with magnificent multibagger gains.
— Porinju Veliyath (@porinju) September 7, 2017
Porinju’s contempt with regard to investing in blue-chip stocks has not diminished with the passage of time and the underperformance of his PMS.
“Even a SSC pass can buy blue-chip stocks,” he said in a defiant tone.
He added that ‘improving corporate governance’ is still a theme to play for.
High-Quality BlueChip Investing has its merits & higher safety, and trust me, you don't need a fund manager or advisor/distributor for doing it – provided you have passed SSC.
— Porinju Veliyath (@porinju) June 29, 2018
Archies is perceived to be a “chor” stock
In July 2015, Porinju pointed out that Archies Ltd is perceived to be a “chor” management though it may be on the verge of a turnaround. He opined that the Company has a “lot of opportunity to expand business”.
Archies | 24 – perceived to be 'chor' mgmnt; can turnaround with its cute brand, neat BS and new initiatives??http://t.co/Y3oAVhuXmQ
— Porinju Veliyath (@porinju) July 8, 2015
PORINJU VELIYATH : See a lot opportunity for Archies to expand business
— ET NOW (@ETNOWlive) July 10, 2015
Aggressive buy of Archies Ltd
Porinju has been buying Archies Ltd in an aggressive manner.
On 20th July 2015, he bought 2,00,000 shares at Rs. 28.23 each in the name of “Sunny Veliyath Porinju”.
Thereafter, on 11th April 2017, he bought another chunk of 4,00,000 shares at Rs. 29.15 each in the name of Equity Intelligence.
Archies – Fund action
EQUITY INTELLIGENCE INDIA Pvt ltd BUYS 4 lk shares @ Rs 29.15/-
(Porinju Veliyath’s Fund)
— SONAM MEHTA (@sonamcnbcawaaz) April 11, 2017
He has been on a further buying spree on dates which are not known.
What is known is that as of 30th June 2018, Equity Intelligence owns 8,30,000 shares of Archies Ltd, comprising 2.46% of the equity capital.
Will Archies Ltd turnaround and deliver multibagger gains?
Seshan Ranganathan, Archies’ CEO, has been making all the right noises with regard to the turnaround of the Company’s fortunes.
In April 2017, he assured that a “complete turnaround” is on the cards. Several loss-making stores will be shut down as part of the restructuring process, he said.
The management also assured that in FY19 the turnover would grow by 15% while the EBITDA margins would surge to 12%.
— Mangalam Maloo (@blitzkreigm) November 30, 2017
|ARCHIES LTD – KEY FUNDAMENTALS|
|MARKET CAP||(Rs CR)||97|
|EPS – TTM||(Rs)||[*S]||–|
|LATEST DIVIDEND DATE||18 SEP 2015|
|BOOK VALUE / SHARE||(Rs)||[*S]||34.80|
[*C] Consolidated [*S] Standalone
|ARCHIES LTD – FINANCIAL RESULTS|
|PARTICULARS (Rs CR)||MAR 2018||MAR 2017||% CHG|
(Source: Business Standard)
At this stage, novices are so badly bruised by the savage correction in the markets that we have no appetite to buy any stocks, leave alone a ‘chor’ stock. However, we have to keep our eyes and ears open because the tide may change suddenly and the appetite for these stocks may be revived!