Sensex Beating Stock Select Portfolio Performance in under Three months

From our Stock Watch of over 300 Scrips these 16 are our Stock Select releases or re-releases on May 4,2009 for as Portfolio Ideas…These are based on Fundamentals and the idea of putting them on this Blog is to assert that even if you were anti-equity and ignored the March 2009 Lows and Sensex of 8000,you could yet have entered beginning May 2009 at Sensex levels of 11500 and made some good returns

No

Company

Opening Value

May 4,2009

in Rs

Current Price

July 21,2009

in Rs

Gain / Loss

in Rs

Gain / Loss

in %

1

Aftek Ltd

9.22

15.35

6.13

66.49

2

Ahmedabad Steelcraft Ltd

15.35

14.17

-1.18

-7.69

3

Allahabad Bank

52.50

84.95

32.45

61.81

4

Bharat Heavy Electricals ..

1651.75

2220.35

568.60

34.42

5

Dena Bank

37.10

52.50

15.40

41.51

6

Grasim Industries Ltd

1778.40

2772.00

993.60

55.87

7

GVK Power & Infrastructur..

38.50

43.15

4.65

12.08

8

IFCI Ltd

25.15

50.50

25.35

100.80

9

Infrastructure Developmen..

76.45

140.60

64.15

83.91

10

Jaiprakash Associates Ltd

138.80

222.25

83.45

60.12

11

Lanco Infratech Ltd

334.05

381.15

47.10

14.10

12

Larsen & Toubro Ltd

879.55

1456.70

577.15

65.62

13

NIIT Ltd

32.00

60.65

28.65

89.53

14

Reliance Industries Ltd

1802.70

2029.60

226.90

12.59

15

S.Kumars Nationwide Ltd

25.15

39.30

14.15

56.26

16

Shree Rama Multi-Tech Ltd

3.79

5.14

1.35

35.62

 Some Observations and Comments

  • In less than three months,the performance of most have been very good…Nine of the Sixteen have surged over 50%…The seven  that have not ,have also seen a surge from March 2009 lows and their northwards movements have decelerated from May
  • GVK and Lanco were recommended on May 21,2009 and NIIT on May 19,2009…all the others were May 4,2009…Opening Prices are as on the date of Reco  
  •  It do not include Sesa Goa,which has been our front runner for a long time now.It currently trades at Rs 230+ ,up near 300 % from March 2009 Low of Rs 60…Last year we had again recommended it at cum bonus and split price levels of over Rs 3000,translating to ex split and ex bonus price level range of  Rs 150 to Rs 165…we reiterated the recommendation several times at every significant decline 
  • It also does not include Firstsource Solutions recommended at Rs 9 and then at Rs 14 in Feb 2009…It now is Rs 22,after seeing a high of Rs 30 recently
  • It does not include Punj Loyd too as this was pursued vigorously in March 2009 at levels close to Rs 100…It’s doubled since them
  • IFCI has doubled and IDFC and NIIT have been near doublers
  • Even the Four Core Scrips,Grasim,BHEL,Larsen & Toubro and Reliance Industries,which have a high Percentage of Portfolio Weightage have performed very well….Of these BHEL,Larsen and Reliance have been re-recommended several times in the past two years…All have been doublers from early March 2009 
  • Only one scrip,Ahmedabad Steelcraft has yet to perform…It had gone upto Rs 20 though a while ago  and has seen a high of Rs 27 last year 

Don’t ask me why I have recommended these or could you yet enter them at these current levels if they have not reached target prices ! My Clients would kill me if I blog free what they pay me for !..But you could try and read between the lines and research these yourselves ! I did cover some of them in my Workshops

And a word of caution…..You must Invest as per your Profile….Many of the above scrips may not suit your Profile…for instance a Conservative Investor in Equities would concentrate only on the Core Scrips and would never Invest in Aftek or Shree Rama Multi-Tech !,no matter how insignificant the exposure would be !…On the other hand, an Aggressive Investor would seize even an event based opportunity even if it was contingent in nature , and therefore more riskier ! 

However I can say this…..any Portfolio created or expanded on May 4, 2009, with Scrip Selection and Weightage based on Investor profile,  from the above  would have registered a strong performance in under three months…in all probability,over 50% as Nine of the above scrips have surged 50% + inside three months….In the same period the Sensex has notched 30% , moving from 11600 levels to current levels of 15100

So a stock selection based portfolio,rather than an Index Fund or Sensex weighted Portfolio  would have nearly doubled your returns over those of the Sensex…..The Magic is to demonstrate consisitency in beating the Sensex over longer Periods….Many,like John Bogle of Vanguard believe in Index Investing only,while Warren Buffett’s Berkshire Hathaway has shown that over 44 years their Portfolio returns are simply mindboggling over those of the S & P 500….Even the CAGR is more than double…S& P is less than 9%,while Berkshire Hathaway is over 20% !…In absolute terms there is absolutely no comparison ! S & P is a shade over 4000 % while BH is over 300000 %  over 44 years from 1965 !

So best of Luck in searching for those Stocks that will  catapult you into stardom ! Rakesh Jhunjhunwala had the conviction in Crisil and Praj and Titan !…Matrix and Mercator have made Millions for many of My Clients a few years ago…a few even retired in their 30s and 40s,but have since returned to work as their Wives simply cannot tolerate them being at home all day !…Oh ! we do suck Lemon too…in the late 1990s it was the Damania Group that let us down…..In 2006/7 Silverline was one such Lemon..lucky we got out in time…a decision I took after an unconvincing meeting with the Promoter after we had believed in the restructuring story…I’ll leave a few others Lemons for some other Day !

Some Contrarion Thinking could be a great Asset…Late 2001,2003,May 2004,October 2008,March 2009…are were simply fabulous times when you could have Invested in Equities for great returns…They say you cannot Time the Markets…but historical evidence of Irrational Exuberance and the flip side of Irrational Panic is so strong in India that Tactical Strategies ( A type of Market Timing) for Equity Portfolios can achieve spectacular results

Problem you face in India,with Increasing Stock Coverage from the ever increasing Number of Stock Channels,is that everyone has a Strong Opinion and a Weak Memory !…and everyone strongly changes the Opinion too !…In a way and literally too…they follow the Stock Markets instead of Stock Markets following them !…For Most,It’s all Hindsight really ! 

What you need is Cash and Conviction both to make your selections and the temperament to hold that Conviction if you feel your Selection was good in the first place…..When Sesa Goa dived to Rs 60 earlier this year from levels of Rs 175 last year,you needed Cash and Conviction both,to buy or to average your holdings…It’s climbed near 300% to Rs 230+ inside five Months ! 

Someone just phoned and asked me what my target for Sesa Goa is !….I told him Goa is great in the Monsoons ! ….are you trying to read between the lines already !?

Cheers !

4 thoughts on “Sensex Beating Stock Select Portfolio Performance in under Three months

  1. Gaurav,

    Are you no longer recommending Sicagen India?

    Could you elaborate more on your experience with Damanias.

    Holding companies such as JSW Holdings offer great value but they may be value traps – any opinions?

    Do you follow SRF and carbon credit story. Is management (Bharat Rams) trustworthy?

    Thank you – Kumar

  2. Hi Kumar,Nitin and Gautam,

    Kumar…check out my comments on some of your queries in my blog of today on Markets running ahead of fundamentals….Interesting that you think JSW could be a value trap…Let me check it out…also SRF and Carbon credits was a story that I latched onto years ago…In fact I was asked to give an unscheduled presentation on this Concept and the Kyoto Protocol at our Annual BSE Training ‘Invited Faculty with Family’ Meet at Fariyas Hotel in Lonavala…There were over 25 leading names of our Capital Markets present…In fact I had spotted SRF in 2004/5 on the DCF Method because of their Carbon Credits Capex Spends and had valued it then at Rs 154 when Market Price was Rs 112…It shot to over Rs 350.I had used this illustration during my Valuation sessions in BSE and opther workshops….Now if Nuclear Energy is added to the Kyoto Protocol or the one that will follow ( Scheduled,I think, for Copenhagen ,in Dec 2010),there will be a bigger market for Carbon Credits…so watch this space

    Nitin…check out my blog of today for accessing Investment Ideas when made

    Gautam….I shall check out Himmatsinga Seide

    Cheers

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