Its been a great year for investing.
its very rare to experience a situation where almost all of the stocks in the portfolio edged to contribute. This of course could be attributed to the under valued state of the markets but also to a crazy conviction of belief. While I held on to a divided mindset with some core positions which will hopefully continue for years, the induction of non core positions afforded me the opportunity to read more, discover several companies and their competence and generally added that “item number” to the movie.
What was heartening was that the non core stocks did so well in terms of their business and strengthened in the economic slowdown that the weightage of some of them went up with price up scaling and a few even entered core. To explain, I follow a weightage system in addition to a secular investing call and when a co does well and it’s pricE goes up to a certain threshold limit, a scrip deserves an entry into core. That forces we to remove some existing core positions which I may do either by exiting the same or by transferring in to non core. That depends on my liquidity position. Thankfully that remained well balanced due to the portfolio performance.
While I relish the performance, a greater challenge lies ahead. The intent of balancing risk of a market sway from election outcomes to tapering to RBI concerns on banking. As a natural consequence and looking at the overall heartening portfolio performance, I reduced some weights on banks. Again this is possible in two ways, one by selling some positions or reducing them or by increasing allocations to non banking stocks by fresh capital infusion. I chose a mix.
There are certain sectors which appeared to be better braced that others. While most of you who read regularly have been aware of my belief in cera and Kajaria ceramics for a long while and I still feel the sector is a many year story, I took a larger focus to the unfolding of the generic space in USA. 400 billion dollar of drugs are going off patent this year and with Obamacare and the dollar strength, it seemed ok. Thus the portfolio saw an addition of several pharma names and increased allocation to some of the existing names. These include aurobindo pharma and divi with Biocon continuing. Ajanta pharma has had a great run and due to that entered core. Please be aware that ajanta has been a multi bagger and even though I reduced a bit to mitigate risk, it continues to do exceedingly well.
Rural india theme played out well. The explosion of land prices, more transparent dealing in agri commodities through better dissemination of information and a more savvy farmer were some causes. Rural india continues to make pucca houses as also demand better seeds, fertilizers, equipment, motorcycles, cars, paints etc. Vst tillers has shown a remarkable performance in tiller segment along with swaraj engines. Bayer and Kaveri seeds continue to do well.
The micro to medium housing segment continues to do well. Given that home is the first point of purchase as an investment decision for self use and that dispute interest rate increases the smaller loan segment remains more robust to demand as net interest impact is smaller and beyond a certain point a house price cannot fall lower saw companies like gruh, repco outperform. To generate cash for reallocating hdfc was reduced by a small margin.
The market continues to have a huge divide. there is an interesting segment called auction where a crazy rule has reduced liquidity of even good companies. Some of the companies have decades of business existence and good track record in most accepted ratios. It is now learnt that sebi would be re examining this segment. If you recall I had written on my investing in acrysil two posts back. The stock has done remarkably well. I identified some more small caps in this segment and am reading up on many. Some stocks have been added like intec capital where motilal oswal took a stake too. Also added were oriental carbon, mirza tanneries.
I have been bullish on information technology all of late 2012 and 2013. Tech m, Hcl tech, mindtree continue to be investments. I added accelya at 650 odd as a non core position but as luck would have it the stock has zoomed and I need to evaluate,
The arbitrage opportunity in one of my early picks, pvr and Cinemax continues. Cinemax was added a few days back but again has jumped up. No intent to add further at cmp less pvr moves up when the margin of safety would again arise.
as I conclude some caveats:
1. Stock investing is risky
2. Every person has a different temperament
3. I am not an advisor. Neither have intent to advise. I write with my free will on my personal thoughts and actions, I may be wrong in my thinking and bear my own consequences
4. Buying anything based on what I do may not be smart.
5. portfolio management is a function of risk mitigation. Greed is a sure way to say good bye to yourself even if a Hollywood movie shows gordon geeko says otherwise.
6. I am passionate about investing as it drives me to read, to learn and know more. You may not have these criteria and thus may be fixated on other issues. I enjoy the process and the journey and don’t bother too much of the outcome except to ensure in my ride I carry a spare tyre, good music and good company.
enjoy investing and more than anything life.