Portfolio review start of H2 2021

 

Note: new / exit position was build during the period of H1 2021 

View on current scenarios related to pandemic wave 2 in India - May 2021

 covid wave 2 in India is hit hard and also reached to villages which was very rare case during the wave 1 2020 and the medical infrastructure in such area are not as good as in the urban city but yes the authority are working on it to tackle the challenges.

 Government is acting on it and hope the results will show up in coming months.  

my thought on it

Most of the medical infrastructure across the country are facing extreme pressure and challenge and the best to support them is to keep ourselves and  people around us educated to follow the necessary precaution.

 This is the least thing we can do which contribute directly to people who are currently facing the challenges whether is medical team or people out their working 24/7 to get all the supply chain management in the country to support medical team. 

1 ) wear mask / wash your hands / keep good ventilation around you 

2) wholesome home cooked food and water to keep the body enough energy for building good immunity and hydrated.

3) avoid gathering whether is buying groceries out keep some distance and wait with patience for your turn.

4) get yourself vaccinated - I am currently not getting vaccinated will wait for some time here as there are people who still need to step out of their home for work let them get their slot first.

their should be guideline give a gesture note by government which I think is missing out  if you have the facility to work from home then let other people who are not privilege for this facility let them get vaccinated first as they need to go out and work in this situation today. 

5) keep positive thought which also boost your mental health. Eliminate all the noise which is generated out of social / print / news media very less of them are spreading positive news and awareness.

6) if you or someone who you know of gets infected please ask them to avoid all the solution given out by social media who think they got PhD in covid master management.

get doctor consultation done who are right team working on ground reality who can address your query. 

Get tested jump into isolation find solution if house you are living is not equip for isolation self help awareness need to be build.

Big question running all over news is why 2nd wave happened in India who is responsible for it ?

if we blame just the government then that not correct we all are responsible for it.

when the government started giving relief major by opening lockdown in 2020 after good sign of control didn't you go out without wearing mask ? or hanging mask on the neck ? didn't you do mutual gathering with family friends ? outdoor activity ? travelling ?  may be some of us were contributing the spread without even realizing about it ?

some people think wave2 spread is done by government purposely  ? will any government do it and then take such extreme pressure to tackle the situation ? 

as we see the outcome in wave 2 to understand why necessary precaution cannot be taken as granted at least till 2022 end where we would be in better position to see how vaccination contribute for herd immunity across the globe.

its true nobody took learning lesson from other countries where wave 2 / 3 were spreading out and create awareness to rest of the world also each country need to share the data with transparency which is not done up to the mark to avoid the shame of  their failures.

politicians /leader need to take learning lesson as their act are directly followed by others.

all gathering event should be completed avoided and denied permission till we see sign of herd immunity.

I had conversation with my friends in Jan 2021 for planning vacation trip so when the question comes cant we avoid it this year ? we come to a point on discussion where  politicians / leaders are doing election rally no social distance / no mask and ask others to follow the covid guidelines ?

large gathering event are allowed  ? so why should we follow the guidelines ?  

politicians / leader have easy access for medical service not the common man hence we should follow it for our benefit.

 very rare there are leaders in the world who acknowledge their failures with their people most of them try to avoid this.

leaders in the country are responsible for slow pace to build the require medical infra in last one yr from last Mar 2020 they knew this very well as most region in the country doesn't have good medical service which it suppose to just realized this failure now in wave 2 when it hit hard.

and its not just government of country its all the other state / districts  level authority have also failed to do so  and only blame game is now going around for each other and some where we citizen of country is also responsible for it.

did any media run any show highlighting how medical infra can be build in better ways in last one yr knowing it how the current medical infrastructure is specially outside cities.

 Media is still highlighting negative side on current situation 

when will media take responsibility for it ?  highlighting  better stories to cover with facts and suggestion ?

media are selling what people are buying to see i.e criticism for others 

do we still have right task force build on global level to share the data with transparence so it can be avoided in other part of the globe its still a big question mark ? we need better medical commando to handle such pandemic rather than WHO.

WHO - is as good as role of local police in the country.

if any country goes into war like situation military are force in

to handle such situation we need military like medical force who should be equip to tackle such pressure. WHO is the only one which is playing this role but its not good enough for the world and its not acting into agile manner.

there are politician who were criticizing and spreading  non-sense talks all over election rally and social media for  most of big corporate house and billionaire when they generate billions of money blaming them for looting the country.

if you see now this corporates were the first to come and contribute to people in this tough time hope this politician can take learning lesson as this corporates and billionaire when generate billions of money is not by stealing from others but by providing them better services. 

stock market view : 

 sit tight its just landed due to bad weather once its clear it will fly again don't try to take another flight.

 

finding value / growth companies in current scenario

is it possible to find any listed company which can be bought in this high volatility  ?

if your answer is no or difficult  to find then stock market is not the place you need to be.

there is always some where companies stock price are traded less than their actual performance ? 

how do you decide the stock price is trading less than its performance ?

example companies growing revenue / sales / PAT  / EPS 15 to 20 % and stock price not even moving more than 20% in that year.

this are the companies where you need to dig more and research the reason why ?

elimination factors:

are this companies are cyclical business ? is this down cycle ? 

does the management has history for miss-management or bad decision / dilution of equity very often / bad capital allocation ?

is company growing with high debt on books ?

not paying dividends ?

will the product generated by companies make sense which can grow well in upcoming days ?

is the company enhancing's the product / innovating new / upgrading technology ? how well it can add value to companies growth ?

read management commentary / con call / interviews to understand the temperament of management. 

decision making : the main stuff which depends on person to person 

all above should give better way of  visualization - now this depends on individual how well they can visualize things with the current data and judgements from above inputs.

then comes the main part - to decide on buying it in the desired price range which you think its best price range to cover margin of safety from sharp downside incase of uncertain event which could affect the current market sentiments. This also depends on individual how good are they to decide and you need to believe in yourself to make this decision rather others opinion.

 once you decide the buying price range now decide how much concentration of money you can allocate in it. 

Note: its very important to also allocate concentration when you are investing as actual wealth for compounding is dependent on this. 

risk control:  this also depends on individual 

Never allocate all your income portion in it always keep certain portion to cover margin of safety in case of uncertainty  for the company  / your family.

below is what I try to follow to cover risk and I do skip sometimes the exact allocation percentage  bcoz my believe in the management is so optimistic that I am ready to allocate a high concentration

example: if I have say 10K of free cash. 

I will allocate 5K in the company

2K reserve to add more incase their is any downside 

3K for family

this becomes as 

50% invested

20% reserved as insurance to cover downside

30% reserved to cover family

   

portfolio review start of H1 2021

 

Enhancement made in writing journal

 Sooner I will be sharing my complete portfolio of stock investment and review them each time in H1 and H2.

if I have made a entry and exist for a company stock I will also write my note the reason for exposure / exist taken.

Note: I will not be writing my entry and exist the moment I make or break into a stock it will be purely twice in H1 / H2 as this is not to influence others to buy/sell the same but its more of journaling my thoughts process about companies and what made me to land or fly away from it.

start of H1 - end of H1

start of H2 - end of H2 

Learning from 2020

lot of learning made in 2020 here are some  key of them which I had noted for improvement.

when it comes to taking decision on investing in bear market I did failed in 2020.

I failed to add / increase my exposure to quality company like allcargo / polyplex during 2020 lockdown disruption it was all  in my mind but didn't have the courage to make the decision.

both of this companies performed better then expected during the Q2 / Q3  of 2020 probability is high they will in upcoming years.

Failed to take exposure in pharma companies during bargain stock price I was convinced  pharma will perform in 2020 as this is necessity to keep the supply chain available of medicines globally.

reason no courage to make the decision.

Lesson learned : I need to enhance my thinking process which is needed  for investing to get clarity of thoughts for decision making.

bear market and disruption are the best opportunity  to invest in quality management who can stand still and increase exposure when company are performing well during uncertainty.

lost patience in one of the quality company stock polyplex and made a early exist.

Lesson learned : question why you want to sell ? if the answer is uncertainty then hold that moment erase all the noise.

I have enhanced my approach to get clarity in  decision making process here is my key question and checklist I consider to take exposure for companies

1) why do you want to invest ? is it growth / stories / or your own thought process that brought you to this companies ?

if its story then better to trade on story rather then parking money for long.

if its your thought process then take a next steps for checklist for long exposure

2) is cashflow / balance sheet supporting ? 

how much % of operational cash is getting converted ? is it on higher side 15 to 20% + ?

what % of  operational margin it makes ? 25 to 30% + ?

3) is the company investing in its growth and how its investing via debt / equity or cash usage ? 

if its via debt / equity question why is not using cash available ? no cash available then how is the companies sustaining in the industries ? check other companies in the same industries is it same case ?

past investment scenario how it was done and its performance ?

3) is the company paying dividend ? what is the yield ?

no dividend question is why ? if no dividend and I assume it must be using the money for investing in companies growth ? if not then where is the money going ? is the management eating up the cash via higher payments to them ? check employee cost ?

4) is it a cyclically scenario of company  ? commodity based product ?

yes - then long exposure cannot be made - set a target when to sell once exposure is taken as commodity based product are cyclically like crude / steel / cement / chemicals .

no - is it a monopoly business or in the top 3 franchise of its industries ? any dependences of its product in market ? what can cause failure for monopoly business ? what is the probability  of such failures ?

5) study on management team ? can it be trusted  ?

- increase research about management team / search interviews / read con call details / annual reports.

check how well is the management answers the queries raised are they making too much forcast for growth ? do they acknowledge the gaps or failures made or just cover up the story ?

if it passes this condition I take exposure in the companies when the stock price is at bargain range.

is financial sector showing sign of improvement ?

 As lockdown is relaxed more are more people are now stepping to buy their own personal transport and own house for living ?

not all of the people are buying with their money in the bank ? mostly via borrowing money from financial institute 

all cooperate sectors has already show +ve sign in there quarter result which means cooperate are also paying interest back to financial institute as normal phase. 

which means financial sector will revive in next coming 6 months. 

take position in this sector with strong franchise and balance sheet.