Warren Buffett, in his latest letter, talks with heart-felt anguish about the ‘50 Billion dollar losses’ that Berkeshire Hathaway suffered owing to his (Buffett’s) “thumb sucking”, i.e. the failure to take advantage of the several opportunities that came his way.
All of us are victims of this syndrome at some stage or the other.
Daljeet Kohli is no exception.
Ajanta Pharma counts as one of Daljeet’s block-buster discoveries. He first recommended a buy in June 2011 when the stock was available at a throwaway price of Rs. 96 (adjusted for split and bonus). Even when the stock became a 10-bagger, Daljeet was bullish about the stock and confidently recommended a buy. However, thereafter, in October 2014, when Ajanta Pharma surged to Rs. 1893, Daljeet surprisingly lost his nerve and recommended a ‘sell’.
Today, Ajanta Pharma is at Rs. 3113 and is still looking good. Raamdeo Agrawal has called it a “dark horse” stock.
With the benefit of hindsight, we can say that a seasoned professional like Daljeet Kohli ought to have known better than to recommend a ‘sell’ of a stellar stock that is on a strong growth trajectory – and that too in the midst of a raging bull market!
Daljeet committed the same tactical error in Shilpa Medicare.
He was among the first to realize the super-potential of Shilpa Medicare. In a brilliant piece written in March 2014, when Shilpa was at Rs. 348, Daljeet recommended a “strong buy” on the basis that there are “multiple triggers ahead”. The “US story is still to start” he added prophetically.
However, surprisingly, when Shilpa played out as per plan and surged to Rs. 557, Daljeet lost his nerve and downgraded the target price to Rs. 473. Fortunately, he did not advice a ‘sell’ and instead recommended a ‘hold’.
Today, Shilpa Medicare is at Rs. 977. The news that the US FDA has inspected its facility as a precursor to approval has sent the stock into orbit.
Yet another example is Kajaria Ceramics. In August 2014, when the stock was at Rs. 626, Daljeet steeply downgraded the target price to Rs. 482 and recommended a “sell“.
Today, Kajaria Ceramics is at Rs. 767.
The important lesson to learn from these episodes is that if you are fortunate to have a winning stock in your portfolio, you must hang on to it, come rain or shine.
Basant Maheshwari rightly said “Selling a stock to buy it back later on a slight dip isn’t the optimum way to get rich but is surely a nice way to get rid of stocks that will make an investor rich”.
Akash Prakash of Amansa Capital offered the same advice: “The fact that a top-quality stock is looking expensive in the short-term is no reason to sell it”.
Warren Buffett, after recounting his own “monumentally stupid mistakes“, advised that one should not regret these mistakes but use it as a learning opportunity. “it’s a good idea to review past mistakes before committing new ones” Warren added tongue-in-cheek.
heh, what we can learn from all this is that it’s pointless to listen to these stupid experts, best to do your own analysis and come to your own conclusion. It’s your own hard earned money, after all.
I completely agree with you…you should pay attention to the information they provide…not the opinion…and then make your own decision…the point is nothing succeeds like success…every stock is different from other…and in the stock market past performance is never a guarantee of future …but a rule of thumb is that if a stock you hold does well, never sell it off completely unless something terribly goes wrong
there we go again, even I am giving advice…we all like to give free advice
Thanks Arjun for this writeup. I feel it is wise to go through the research reports of such Ace stock pickers and then decide yourself if one wants to buy it or not.
It has happened with almost every big, bigger, biggest investors also…
RJ sold ACC @3500. ACC went till 10000. LOL…
Ramdev Agarwal – did with Bharti..
Many people would have done this with Symphony… which grew about 200 time in last 4-5 yrs. Before that it gave many jerks of 20-50% up down.
I also have done this with many stocks, (some of them listed below) due listening to too many people on TV channels, without studying the facts and looking at the business life/cycle/category/quality/leadership/pricing power –
Conclusion – Do study the co, at least if its gaining something for u before offloading it.
[always better if u get interview of promoter/management of a co OR some big investor about the co]
[1] – Wockhart – sold @ 500- cmp- 1700 and growing
[2] – Lupin – sold @ 650 – cmp -1800 – after studying more re-entered @ 1200, looking forward to keep it till 5000. I sold lupin 3 times becoz I never studied its fundamentals and re-entered at higher level again n again..
[3] – Sintex – sold @80 – cmp – 120
[4] – Tata elixi – sold @600 – CMP – 1300
[5] – Mcleod russel – sold@85 – went till 360. never came below 225. CMP – 280
[6] – Page Industies – sold @ 7700 CMP 13000.
[7] – Eicher motors – sold @9000 CMP 16000.
[8] – Bosch – sold @17000 CMP – 23000 +
Controlled my nerves many times and managed to hold some good picks –
[1] – MCX – was about to sell around 840 but after studying more and more and Listening to 3-4 big investors, decided to hold it for long term[3,5,7,10 yrs] till it expansion program come in at least- CMP – 1170. endless growth possible… may be even 20-30 times from here.. if allowed foreign nationals to trade..Banks to trade etc etc…
[2] – Sharon bio – was about to sell @16 and book loss. But after studying it I decided to hold it for 2 yrs. near term can be anything. after re-construct of Tajola plant which will be definitely be again UK/US standards..
10-20 times also possible in 3-5 yrs. Last week it got letter of approval from UKMHRA for extened fascility of Dehradoon..CMP -22.
USFDA is increasing number of employees by 30% in India this yr to make the checks faster.
[3] – Shilpa – was lured to book profit @ 850 and re-enter later but after learning about its future potential, decided to not to sell for at least 5 yrs… can grow above 5K to 10K in 4-5 yrs.
[4] – Srikalahasthi – was about to sell @ 80, after studying more decided to keep it till infra spending picks up, smart cities work start at many places…CMP – 160 at PE only 9. positive Cash flow highest in last 10 yrs..
[5] – TFCI – was to sell @60. CMP – 73.. 5 mutual fund house started buying in this last yr…
[6]- CCL prod – was to sell @ 90. After studying details, decided to hold this for long term- 4-5 yrs at least till expands to North America. CMP – 175.
[7] Century Ply- my Idiot-broker Kotak sec, sold my position @ 60. I reentered @65. CMP – 240.
[8] Rcap – was tempted to sell due to Ambani factor.. After studying details/ listening to management – will hold it for long – as it will have tie-up with international partners for every vertical..Nippon for life insurance, will tie up with japanese co for infra/industrial business, will tie up with some Health insurance co for health insurance business, will tie up with some morgedge loan co for home loan business, then will come to banking business… Finally, Rcap will not be Anil ambani co but a group of foreign companies just having Anil ambani as ally to get rights to do business in india. TV people are restless with same comments(promoters integrity)..Once it will cross , 7-800, they will ask to buy…
ur stock picking is excellent. can u pls tell me which blogs or websites suggest stock recommendations.
I learnt a little bit by listening to Mr. Basant Maheshwari, Mr. Ramdev Agarwal, RJ, Rajesh tambe, Mohnish pabroy, Warrent Buffet and many great people who share experiences openly…
Their videos are available on Youtube..
Stock picks comes easily from TV channels but learning for which ones to buy or hold-longer will only come from own inner conviction you can be right or wrong, which comes only with detail research/analysis/knowing about longevity/cycle of the business + gaining experience actively. For Example – I like to know What DD Sharma is recommending in Value pick@ 8:30 show @ CNBC Awaz but don’t run after every recommendation…
http://rakesh-jhunjhunwala.in/ is a great blog to study stock-picks of great investors and making one time position OR buying in chunks in some of them.
I believe, in share market, a share price is never correct. All gains are not gains and all losses are not losses. Besides this, If we digest below given 2 points in our minds we can make good money from share market.
[1] – The biggest mistake is to buy bad stocks (or businesses priced high and with more uncertainty) due to feeling of left behind….One should leave those stocks by imagining that you are not invited in this party, whether its Amitabh Bachchan’s party or Queen of England whoever….
For example – After selling ACC @3500, RJ did not enter again @4500 or 6000 whatever..becoz it was more risky to re-enter overpriced cyclical business….. I would not re-enter in Page ind at current or higher levels…To me this business is not as promising as Pharma
[2] – Market gives opportunity again and again, don’t feel bad after a rally you did not participate-
For example – Even in current market also – Its sure that PSU banks will get doubled from current levels within 1 to 2 yrs only, but at the same time if someone looses nerve he can blow his money in short term. It would be good to buy PSU Banks for at least 1 to 1.5 yrs time horizon. My pick is Canara bank.
Rcap is availabe at very good price..looking at the future scope.
Even in July 2013 when indian market had lowest hope, some stocks were at lifetime high…and even in last week when Nifty touched 9k some stocks were around the price of july 2013…I’m talking about the stocks which can give multiple return and not craps…. Punj Lloyd availabe@34. The Management has spoken..2015 will be turn around yr. EBIDTA will be posiive very soon..HDIL is already on track- has cut debts, new projects etc. IVRCL has said concentrating on cutting debt..Good big infra co if debt is gone. it would again be a 10 bagger…EIL .. PSU engineering co.. BGR energy… All these can be bought 25% at current level…If they fall considerably i.e 20% or more buy another 50% else buy only 25%..and leave..for 2 yrs… Never buy 100% target amount in one go in a co going through problems. In fact no quantity should be targeted as 100% in such co. means keep low holding so that you can manage even at lower levels… I did so in Suzlon(lifetime high was around 400)….was buying from 33 kept buying becoz of the business nature….bought heavily @10 sold @29… for 150% gain.. Now again Suzlon also can be accumulated… Mr Sanghvi will take it to Solar arena very soon.
Cashflow(future cash flow for value picks) study will help u more to decide the picks…. Excellent profit making businesses has always high +ve cash flow that’s why their PE is so high..Like Nestles and HULs etc…
DD Sharma is another good analyst….same league as G.Chokkalingam
@AKM…fabulous recounts. I have been there a zillion times, myself.
– sold PTC india Fin @ 60 odd, only to get back 4 Rs higher
– sold HCL, just because they gave a treasury income warning before Q3. Guess what happens, not only Q3 was fabulous, they also announce bonus..missed out clean 30% on a stock held for long
– sold AIA, post the strike announcement in one of their subsidiaries. proved to be a waste of a decision. Had to eat humble crow and buy back higher.
The list is long….life long learning(s) continue
Holding is the key. Traders make money for brokers n exchanges.
It is clear in this bull market that some stock prices ran ahead of fundamentals. Ajantha Pharma and Shilpa are two such stocks and it is hall mark of good analyst to alert about target price and tell the investors what should be their next step.
Although am a big critic of DK, I personally felt he gave a right call to sell these stocks.
My examples were reverse. I bought Deepak Nitrite pre bonus and split and held on to till now. I got an opportunity to sold at 100 odd levels but did not sell it when the results of first two quarters were good. It is down 30% from the 100 odd levels.
I bought IL&FS investment managers at 25 and it is now 19.50. Bought SJVN at 27 and now 26 after one full year. Got L&T at 1750 almost 3 quarters ago and CMP is below 1700.
wow.. what a thread !! good 2 pointers by akm. Thank you.. keep the wisdom coming.. cheers !!
what about Granules India?? Isn’t that a multibagger in making?? or Pioneer Distilleries?
or some penny stocks like Cals Refineries?
@akm fantastic pick buddy can i hv your email id plz 🙂
Good Thread and analysis!!