July: the heat is over, here comes the rain

Hey everyone,

At the very outset, the blog update was delayed. A bit due to my vacations and a lot with the market momentum. One of the reasons to update the blog is to voice an opinion. But when the opinion is manifested without the need to say it, why just complete a formality.

As some of you will recollect from my tweets, I decided not to buy stocks initially to play on the budget. The move seemed a blessing more by default than by skill as the markets gyrated heavily on the day of the budget and thereafter.

If you ever observed a fisherman, he puts a bait knowing that the waters have fish. He makes no or little noise, sits by the water side and waits for the right bite. When he gets it he pulls the fishing rod and is left with his prized catch. If not, he enjoys the day basking in the sun as if it were a picnic and makes the most of that.

The fisherman was my inspiration last month, partly guided by higher accomplishments in life such as time with one’s own self, a relaxed vacation and an opportunist market.

As the markets corrected on budget day and beyond, I noticed some scrips fell more as if there was a bet on them for one day and some of these were added to my holdings, as detailed later in this note.

Meanwhile one of the reasons why I was not stressing myself to search for ideas was due to the fact that all and I mean all the stocks recently looked into gave me many reasons to smile.

I am detailing below the stocks covered last few months and what the market did to sponsor the smiles:

1. Nbcc: the stock was identified at 109 odd more. More by a sheer coincidence of seeing the kidwai nagar project in progress and a bit by looking at existing cash and future cash inflows. The co collects cash in advance by pre selling and uses the cash to fund its construction. Now there is talk that some of the psu land parcels will be re-done and Nbcc should continue to lead. While the stock zoomed from 109 to 480 odd, on the budget after effects it corrected well to 370 levels. The stock was added at 370 rs as tweeted and has again bounced back to 445 odd. The co continues to be in core holdings as the visibility appears good. The govt thrust on infra and the cut in interest rates with focus on mid level housing could be another bonanza.

2. Ptc financial: the stock was identified at 15 rs odd and has a great run up to 40 odd. While the prospects of the co remain good, there is no new story to write on. The stock is a hold.

3. Next one: a completely unconventional idea doubled from 4 to 8rs. The co will soon raise money to pay for license renewals of radio channels in the subsidiary where BBC is a co shareholder. The govt policy recently proposes that radio channels can now do news as well and that sounds like music given BBC is involved.

4. Oriental carbon: I’ve written several times on this. At 110 the idea was shared to me by a dear friend, ayush and was written on. The stock was again written on at 200 odd and has done well. The co continues to perform well and continues to be a buy.

5. Indo count: I wrote on this at 55 odd as it was a decent growth story at a ridiculous valuation. A few friends who bt the stock changed gears when after going up to 70 odd almost instantly it cooled off. One of them said not convincing and one said too small a holding and thus will sell. Both statements were ridiculous. Allocation is a personal choice but an imposed ration and not convincing should have been thought before buying. I recall an excellent statement: A LION NEVER LOSES SLEEP OVER THE OPINION OF SHEEP. Before some of you think this is an arrogant statement, let me explain. The reference to Lion is to suggest that you need to have a brave heart when you invest. More so when you invest on a self propelled idea. The reference to sheep is to imply why bother of opinions of ppl who are not the originators of the ideas, have not visited the co, have not read much on it but are driven just by moments of rise and fall. The stock thankfully rewarded and has doubled since.

6. Rswml: this stock was added as a cheap stock with decent growth and excellent dividend. The stock has done well from 140 to 200 odd rs and remains a hold.

7. Kitex: the stock has done very well. An exporter of children clothing to top brands has seen a rise from 120 to 280 and then a fall from 280 to 220 post results. I am in strong disagreement on results being disappointing, as ppl are getting too fixated on qtr results and now have magical expectations. I added more of the stock at 225 rs and the stock has now bounced back to 280.

8. Hindustan composites: identified as a deep value stock around 400 rs the stock suffers from illiquidity. Nevertheless I used the time factor to buy in and the stock has now moved to 550 rs odd. Somebody wrote in to me saying the co has poor growth. The person missed the logic of investing as also that poor growth had dogged many cos sensitive to the economy, this co caters to auto and railways and was identified partly due to revival in these 2 businesses but mostly due to the investment portfolio of non related stocks it owns. The stock continues to be a value pick.

9. Bharat electronics: the co was picked earlier at 850 And then at 1000 odd. The co had a phenomenal run up to cross 2200 rs. I booked partial qty at 2200 rs odd but continue to hold the balance as the move to open fdi in defense should cause increased investments. At one point, bel used to work with General Electric in a jv and has demonstrated excellent delivery skills. With recent russia Ukraine controversies I see more strength in defense. The co also holds decent cash.

10. Concor: while the stock had a decent run up, more potential lies ahead. The govt plan on railways itself means concor will do well as it goes hand and hand with rail infrastructure. On budget corrections,the stock fell to 1200 odd and I added more shares.

11. Tata dvr: the logic to buy at 189 rs found acceptance with markets eventually partly driven by bridging gap between the stock and the main Tata motors shares and partly by overall better prospects of Tata motors. In a recent letter, the Tata chairman wrote that the worst is over for commercial vehicles. The stock has outperformed the main shares and moved up to 330 odd. Some days back on results it tanked from 310 rs when I sold most of it to 280 rs which promoted me to add back. I sold initially to use money on another idea but bt on insanity of the fall.nThe stock remains a hold.

12. Hcl info: this one has been a star from 25 rs to 33 when it was again added to 70 rs now. It remains a hold. The co recently tied up with Lenovo and continues to spread its business tie ups. Awaiting the impact on working capital unlocking.

13. Krbl, 14. Multi base 15. Mt educate 16. Sun shield: all these ideas have doubled save for mt that moved from 80 to 130 odd. Recently the govt announced that seat belts would become mandatory in several vehicles inc for back seats. Multi base has a focus on this. Sun shield a solvay group co is faring well. Many many not recall that solvay itself delisted at a huge premium. The chemical sector is showing huge leaps driven by a china effect.

17. Ashoka buildcon: the stock moved from 100, 110 rs to 150 rs odd. The co has good transparency ahead with some recent order inflows and remains a hold.

My point of this analysis is to partly fill in the gap of July update and to say one can buy the same ideas again. To force a new idea just for novelty makes zero sense. Some ppl on twitter and by emails or SMS ask me for new ideas. I ask them what’s wrong with the existing ideas.

In the last months, I have totally exited tv18 post a run up. In non core, I added vst industries post budget at 1450 rs as it remains an excellent dividend stock. I also added and like titagarh wagons and jain irrigation dvr. The later was added at 67 rs odd.

I will update my thoughts on markets and portfolio in august though not much action on the portfolio these days. Unless I find a cracking opportunity to buy a new idea or an existing idea or a reason to sell an existing holding, the markets continue to be a market where u bought a pre ripe mango in summers and are now enjoying it.

Happy investing and good luck to all of you.

My standard disclosure: no recommendations are intended, the views expressed are personal.mi am not an investment advisor and have the right to be wrong or the blessing of being right for the wrong reasons!! All typos may be overlooked. As I write spontaneous.

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One thought on “July: the heat is over, here comes the rain

  1. Nishchint Sharma says:

    Dear Safir ji

    Its always learning & delight to read your blogs. Something that coming straight from guts & heart(honest). Keep writing. Thanks & Regards Nishchint

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