Portfolio makes gain of 42%
“You made 42% return last year?” Ayesha Faridi, the charming editor of ET Now, asked Porinju in an incredulous tone even as Nikunj Dalmia, her colleague, had a wide-eyed expression of disbelief on his face.
Porinju was having difficulty controlling his joy while keeping a straight face.
“This is not only me. Most of the active and smart players in the market are making such returns. Somebody could be out there making 100 per cent return,” Porinju mumbled in an attempt to look humble and downplay his achievement.
Porinju’s comeback has been sensational. It may be recalled that in January 2017, in the aftermath of demonetisation, some of his followers were apprehensive that the returns of the PMS would plunge.
At that stage, Porinju had issued a clarification and assured his army of fans that Q4FY17 would make up for lost ground. That has indeed happened.
Thought of clarifying PMS performance, as I noticed many people attempting to mislead investors. Expecting Q4 to contribute significantly? pic.twitter.com/S3KKVZxXRH
— Porinju Veliyath (@porinju) January 16, 2017
Stocks which have contributed to the stellar performance of the portfolio
“Tell us which are the three top stocks which have worked for you in your portfolio,” Ayesha asked, knowing from her vast experience in journalism that complete information must be extracted from the interviewee.
Porinju credited the usual suspects for his spectacular success, namely, Biocon, Jubilant Life Science and LT Foods.
“Biocon was one of the main stocks. Even Jubilant Life Sciences and LT Foods contributed.”
This fits in because LT Foods has given a mind-boggling YoY gain of 195%. Biocon has kept pace with a spectacular 135% YoY gain while Jubilant Life Sciences was right behind with a massive 92% gain. The other favourite stocks of Porinju, namely, Bombay Burmah Trading Corporation (BBTC), Bengal & Assam Company, HSIL, TCI and TCI Express have also posted hefty returns ranging from 65% to 35%.
Porinju’s latest bulk deal purchase, Cimmco Ltd, (which is not a stock held in the PMS) also stunned by rocketing from Rs. 58 to Rs. 100 in the matter of just a couple of days.
Portfolio turns highly diversified with 40-45 stocks
Porinju candidly admitted that he has given up his ambition to have a concentrated portfolio. Instead, he has gone the other extreme and diversified widely with 40-45 stocks in the portfolio.
“We usually have 10-12 stocks in a portfolio. Because as the AUM has been rising, we have widened our portfolio to 40-45 stocks,” Porinju said in a sheepish tone.
This is an inevitable consequence of having a large AUM while buying small and mid-cap stocks. Because the amount of funds that can be invested in such stocks is limited, one has to necessarily diversify widely and buy multiple stocks, including large-cap stocks (see Porinju Veliyath Recommends Blue-Chip Large-Cap Stocks In Change Of Strategy To Tackle Surge In AUM Of PMS).
It is worth recalling that Rajiv Khanna, Dolly Khanna’s illustrious alter ego, has also admitted to having nearly 40 stocks in the portfolio. The portfolios of Ramesh Damani, Ashish Kacholia and Vijay Kedia are also reflective of this reality of life.
AUM of PMS Portfolio doubles to Rs. 800 crore while the number of clients swells to 1200
Porinju also made the sensational revelation that the AUM of Equity Intelligence, his PMS, has swelled to Rs. 800 crore and that the number of clients has increased to 1200.
The growth in the AUM is nearly 100% as compared to last year.
One can judge the enormity of this from the fact that several mutual funds are lagging behind in terms of AUM and returns. The PPFAS Mutual Fund, for instance, has an AUM of Rs. 718 crore as of the end of February 2017 and earned 3.28% in the calendar year 2016.
1000’s of multibagger stocks which are ripe for the picking
“I am seeing very clear visibility of maybe 500, 1000 smallcaps, smaller midcaps going by two times, five times and ten times. I am talking about nearly 1000 companies. Some of them may double and triple. So there are huge opportunities,” Porinju said.
Porinju gave cogent logic to support his hypothesis. He explained that India is still only a $2 trillion dollar-economy and that it has a long, long way to go. He also pointed out that there is a radical transformation happening because the hitherto “chor” companies are now having to perforce change their attitude because the avenues to siphon off money, accumulate black money and spend the black money have dried up. The promoters are changing and are trying to manage the company better, more professionally.
“India is a heaven for stock picking and there is no shortage of ideas,” Porinju exclaimed.
“In the next at least two to three years I am seeing major, major wealth creation,” he added in an excited tone.
Stock recommendations for FY 2017-18
Ayesha and Nikunj made it amply clear to Porinju that he was expected to offer stock recommendations to us.
Porinju, being a good sport, did not disappoint.
He recommended Sarda Plywood as a company which would do well in the transition from the unorganised sector to the organized sector.
“This is a very old company with a very strong brand, Duro. Duro and Kitply were the only two big brands in India a couple of decades ago … It is very difficult to say this was only a Rs 50-60 crore market cap. This was a very strong high quality brand and a long way to go in this country,” he said.
He also advised investors to keep an eye on his old favourite stocks such as Tata Global Beverages, TCI, TCI Express, HSIL, Lakshmi Vilas Bank, South Indian Bank, Federal Bank, Sunil Hitech etc.
“I am extremely bullish about these stocks,” Porinju said with a big smile on his face.
Forget 25-30% Nifty gain in 2017, it's more important to identify & pick potential winners in India's emerging new economic environment!
— Porinju Veliyath (@porinju) December 6, 2016
Shankar Sharma endorses theory that the party for mid-caps is just beginning
Shankar Sharma has been amongst the few who advised us to invest in small and mid-cap stocks with the assurance that we would make more money from them as compared to large-cap blue-chip behemoth stocks (see Forget Large-Cap Stocks. Micro-Cap Stocks Will Give Upto 300% Gains: Shankar Sharma).
That prediction has obviously come true.
Shankar Sharma has now confidently asserted that despite the huge gains which are already on the table, small-cap stocks are still the “single best asset class” and are “set for a massive run” even incrementally.
Indian small cap indexes just cleared 2007-8 highs. Been quite a wait…but now set for a massive run, incrementally too. Single Best asset
— Shankar Sharma (@1shankarsharma) March 31, 2017
Unfortunately, Shankar Sharma did not name any stocks though he has previously recommended Kiri Industries and A2Z Industries as being investment worthy.
Basant Maheshwari also calls buying stocks a no-brainer
Basant Maheshwari has also offered us the soothing advice that buying stocks is a “no brainer” because stocks will go “up, up and only up”. Of course, Basant’s advice is meant for the medium and long-term. In the short term there will obviously be volatile and downward movements in stock prices.
Basant has also fulfilled his obligation to be stock specific by putting the spotlight on PNB Housing Finance. The stock will do “phenomenally well”, Basant has assured after giving convincing reasons for his analysis.
The advice of the three stalwarts that India is a “stock pickers’ heaven” and that there is “major, major wealth creation” that will happen in the foreseeable future is like music to our ears. We also have a ready-made portfolio of stocks that has been handed over to us on a platter. Now, all that we have to do is sit tight on these stocks and wait for the riches to roll into our portfolios!