2 Month Investment and Trading Returns (As on Feb 08, 2017)



 

Here is a comparision of my last 2 month performace of both Trading and Investing, relative to various indices and mutual fund performance.

Investing performance is slightly understated, since it does not include dividends. In the next installment, I shall take care of this.

I have explained the methodology involved in creation of these performance curves elsewhere.

I don’t want to comment on this performance too much, since it is only a 2 month performance, during which the market yo-yoed like crazy. But still, it is interesting to note that my investing performance was better than my trading performance.

Investment Performance October 2014



The last 2 months were not happy, from a relative performance point of view. The reasons for this are not difficult to see. I went on purchasing IDFC, Oberoi Realty and IL&FS Investment Managers, despite poor market performance. This general underperformance of some of my largest holdings was a prime reason for the underperformance. Other stocks which significantly underperformed also included Selan Exploration and Sesa Sterlite, partly driven by the Oil price fall. NMDC was another underperforming, based on low global iron ore prices, though NMDC’s own financial performance should continue to be robust.

Here is my graph of relative performance:

Here is a table of rolling returns:

Column1 Nifty Midcap Nifty SBI Midcap Fund Kotak Classic Fund My Porfolio
Last Month 3.3 4.3 3.6 4.4 3.8
Last 3 Months 5.6 7.6 13.0 7.5 8.3
Last 6 Months 22.0 32.7 41.0 24.0 47.3
Last Year 32.3 53.4 76.1 38.5 89.4
Since Inception 32.3 53.4 76.1 38.5 89.4

Portfolio Composition and changes in August 2014



Here is the list of stocks which constitute 1% or more of my portfolio:

Stock Latest Price Inv. Price Overall Gain % % of Portfolio
Oberoi Realty (52) 255.15 239.2 6.68 9.59%
IDFC (77) 142.35 130.0 9.52 8.14%
eClerx Services (17) 1,345.00 1026.5 31.02 3.23%
ILandFS (31) 20.35 15.0 35.95 2.65%
Selan Explore (28) 562 317.7 76.88 2.45%
Cummins (4) 699.3 411.2 70.05 2.39%
IRB Infra (15) 257.3 81.3 216.29 2.09%
Larsen (16) 1,581.85 1024.8 54.36 2.04%
NMDC (27) 177.85 133.0 33.75 1.99%
Bharat Forge (9) 856.75 272.3 214.69 1.97%
Mayur Uniquoter (11) 434.25 111.0 291.1 1.95%
Kaveri Seed (13) 930 296.6 213.51 1.89%
MPS (14) 545.1 128.7 323.66 1.88%
Balkrishna Ind (11) 752.6 232.3 223.92 1.86%
Shilpa (11) 517 375.1 37.84 1.74%
Sesa Sterlite (3) 279 151.0 84.78 1.67%
RS Software (14) 539.6 206.5 161.29 1.56%
EID Parry (13) 220.6 141.5 55.93 1.52%
Sun Pharma Adv (18) 197.85 121.9 62.27 1.48%
PTC India Fin (6) 44.15 15.0 194.98 1.41%
Hind Zinc (18) 165.1 122.0 35.34 1.36%
Indian Hotels (13) 96.55 59.9 61.06 1.35%
PI Industries (10) 437.6 159.0 175.23 1.35%
Ajanta Pharma (14) 1,604.10 1007.7 59.18 1.30%
Grindwell Norto (7) 490 256.5 91.02 1.25%
Munjal Auto Ind (11) 84.7 34.0 149.17 1.20%
Tata Inv Corp (13) 561.45 405.0 38.63 1.19%
Oriental Carbon (9) 290 113.2 156.17 1.17%
ITC (21) 349.95 307.0 13.99 1.11%
NTPC (6) 141.3 130.2 8.51 1.07%
ICICI Bank (9) 1,548.75 933.8 65.85 1.05%
Sobha Developer (12) 465.5 288.6 61.28 1.03%
Banco Products (2) 142.1 56.2 153.02 1.00%

The stocks representing more than 1% of my portfolio now constitute 68% of my portfolio, and the number of stocks are 33. 32% of the portfolio is represented by the top 8 stocks. I fully intend to concentrate further, so that the top 8 stocks represent 50% of the portfolio.

However, the concentration of scripts has hurt me, since my top stocks, Oberoi Realty, IDFC, Selan Exploration, and IL&FS Investment Managers have significantly underperformed the market in the last couple of months. The only one amongst the top 5 which saw outperformance was eClerx Services. Other top stocks which underperformed included Mayur Uniquoter, IRB Infra, BKT and Sterlite and Shilpa.

The three stocks which saw major outperformance was my old favorite MPS Ltd., and Kaveri Seeds. NMDC and Larsen, while not majorly outperforming in the month, gave me the benefit of buying these stocks on dips in July.Old favorite Cummins continued to do well. Another stock that did well in August was SPARC. PTC India Financial Services and RS Software did remarkably well in August.

What new stocks did I buy? I bought some Exide and some Amara Raja, since both constitute a nice duopoly, I bought HPCL, because there is tremendous value embedded in the company, with or without GOI policy issues, I bought Kitex Garments on a ValuePickr recommendation, Mazda Ltd and Linc Pens on my own reading of the balance sheets and potential. I added to Indian Hotels on a dip after the result. I bought HIL on an India Nivesh Recommendation. Finally, I continued to buy IDFC on dips.

Performance Tracker for August 2014

Here is a graph of my investment performance in August 2014:

 

While I continued by relative performance over the other benchmarks, I am still quite disappointed with my performance in August 2014.

Why is this? Well look at the table of rolling returns below:

Returns My Portfolio Kotak Classic SBI Midcap Nifty
Last Month 6% 5% 7% 3%
Last 3 Months 18% 9% 18% 9%
Last 6 Months 64% 31% 41% 30%
Since Nov,8, 2013 85% 36% 67% 32%

So, while my portfolio still outperformed the large caps, the one month and 3 month performance over the SBI Midcap fund is disappointing.

Why was this so? Partly, I think because IDFC and Oberoi Realty have now a nearly 20% share of my portfolio. And these shares are hardly moving. As a result, the overall portfolio performance is getting muted. While this is disappointing, I still believe strongly in both stocks. And I am using the relative underperformance of these two stocks to buy more.

On a more positive note, the total assets being managed by me have grown to nearly 3 times what it was in November 2013. Part of it is a nearly 80% jump in the NAV. Partly, it is more investment.

Given that I believe we will have a secular bull run for some years if the Modi government performs, I intend to deploy more funds in the market. However, now each stock I intend to purchase is going to have some thing going for it, which is aside from government regulations, and which is unlikely to perform very poorly, if the promised economic agenda does not materialize.

 

 

Portfolio Composition and Changes in July, 2014

Portfolio Composition, July 2014

 

Here is the list of stocks which comprise more than 1% of my portfolio at the end of July 2014.

Stock Latest Price Overall Gain % Percentage of Portfolio
Oberoi Realty (49) 251.9 5.34 10.23%
IDFC (71) 149 15.87 8.57%
eClerx Services (17) 1,284.95 25.17 3.40%
ILandFS (25) 24.85 75.91 3.16%
Selan Explore (28) 585 84.12 2.80%
IRB Infra (15) 249.1 206.21 2.23%
Mayur Uniquoter (11) 430 287.27 2.13%
Balkrishna Ind (11) 769.9 231.37 2.10%
NMDC (26) 169.8 28.28 2.06%
Larsen (14) 1,469.15 45.25 2.03%
Cummins (4) 606.9 49.22 1.93%
Shilpa (11) 514 37.04 1.91%
Sesa Sterlite (3) 282.5 87.09 1.86%
Bharat Forge (9) 722.25 165.29 1.83%
Kaveri Seed (13) 700.15 136.03 1.57%
Ajanta Pharma (14) 1,664.60 65.18 1.49%
EID Parry (13) 190.65 34.76 1.45%
Hind Zinc (17) 162 33.88 1.43%
Sun Pharma Adv (18) 168.2 37.95 1.39%
MPS (14) 348.05 170.51 1.32%
PI Industries (10) 383 140.88 1.30%
RS Software (14) 407 97.08 1.30%
Tata Inv Corp (13) 539.4 33.19 1.26%
Grindwell Norto (7) 420 63.73 1.18%
Indian Hotels (8) 94 75.65 1.18%
Munjal Auto Ind (11) 75.75 122.84 1.18%
NTPC (6) 140.45 7.86 1.17%
Oriental Carbon (9) 264 133.2 1.17%
PTC India Fin (6) 33.15 121.49 1.17%
ILandFS Trans (15) 228.7 70.18 1.17%
ITC (20) 349.6 14.84 1.16%
ICICI Bank (9) 1,474.00 57.85 1.10%
Muthoot Cap (10) 170 80.81 1.07%
Tata Steel (4) 549.9 100.66 1.07%
Sobha Developer (12) 438.8 52.03 1.07%
TCS (7) 2,515.10 42 1.03%
Banco Products (2) 129.5 130.58 1.01%
Reliance (6) 975.4 29 1.01%

What has changed? For one, I have spent all of July 2014, increasing my stake in Oberoi Realty and IDFC. This was as per my earlier stated intention. Now, both stocks comprise around 10% of my portfolio. This is essentially in keeping with my objective to concentrate my portfolio. Sometime this month, I will write about my investment rationale for both stocks.

I sold all of my Clariant Chemicals, simply because it had risen out of sync with possible valuations, and invested the proceeds in eClerx services. Increasing my exposure to eClerx was also my stated intention in earlier posts.

I also increased my exposure to NMDC and Tata Global Beverages, on a dip in prices of both. I increased my holding in Shilpa Medicare and PI Industries (PI following nice results). Finally, poor Larsen and Toubro results for the quarter resulted in sharp dip in prices, which I bought into.

I sold out of Morganite Crucible, more for the sake of not investing in stories without any technological or brand edge. Instead, I dipped my toes into Bayer CropScience, and on the MNC theme, increased my exposure to Grindwell Norton. Finally, there was some buying of PTC Indian Financial Services and IL&FS Investment Managers, both on a relative dip in market prices.

Concentration continues apace. The stocks which comprise at least 1% of my portfolio are now down to 38, and the total percentage of these in my portfolio is now more than 75%.

My eventual aim is to increase the concentration even further, with 25 scrips comprising around 90% of my portfolio.

What stocks gave the best performance in July, 2014 within my portfolio?

IDFC for sure, following the RBI announcement on CRR and SLR requirements on infrastructure loans. IRB Infra, following a decent result, and positive government announcements for the roads sector. IL&FS investment managers, despite becoming ex-dividend.

From the ValuePickr basket, Ajanta, PI, Mayur and Shilpa, all gave great returns in July.

Another great stock last month was Bharat Forge.

Investment Performance in July 2014

After a relatively muted performance in June, July was again more of the same. Part of this was the overall relative poor performance of the markets. As far as my portfolio was concerned, there was outperformance vis a vis the Nifty, and I finally managed to outperform the small cap index too, but compared the SBI Magnum Midcap fund, the performance was not better.

Nevertheless, there was reason enough for satisfaction. My performance might have been even better, had I not lost some money in speculation based short term trading. I am still not able to do this well, and maybe I should just stop doing it. That, or I need to control my psychology better.

Here is the familiar graph of overall fund performance. As you can see, the total assets undermanagement are increasing very rapidly. This is because I am deploying fresh cash, and also because the portfolio is doing well.

 

I have tried to improve upon the graph a bit. I hope this is more intelligible than the earlier version.

Also, as always, a table of rolling returns:

Returns My Portfolio Kotak Classic SBI Midcap Nifty
Last Month 5% 1% 5% 2%
Last 3 Months 42% 14% 24% 15%
Since Nov, 2013 75% 28% 56% 26%

As you can see, since Nov 2013, my portfolio, in terms of the NAV, has increased by 75%. The Nifty, meantime, has increased only by 26%, and the SBI Magnum Midcap fund, by 56%. In a blended sense, between the Kotak Classic Fund and the SBI Midcap Fund (Blended in a ratio of 1:2. similar to the ratio of large caps to small caps in my portfolio), the outperformance in 3 quarters is around 30%.

As always, to understand how the NAV for my portfolio has been arrived at, I would refer you to the following post: Understanding the NAV Calculation

Investment Performance in June 2014

After the blowout outperformance in May 2014, my portfolio performance in June 2014 was somewhat muted, relatively speaking.

Here is a graph of my portfolio performance:

 

Here is a table of returns:

Returns My Portfolio Kotak Classic SBI Midcap Nifty
Last Month 7% 5% 7% 3%
Last 3 Months 35% 17% 20% 18%
Since Nov, 2013 66% 27% 48% 23%

As you can see in the table above, my portfolio outperformed the Nifty by 4% last month. Over the last 8 months, this outperformance has been a whopping 43%. However, it has been the time for Small Caps and Midcaps. And my porfolio consists largely of such small caps and midcaps. Compared to the SBI Midcap Fund, my porfolio performance is not as phenomenal. In the last month, the performance has been in line.  And the BSE Small Cap Index has actually eclipsed my portfolio, though not by more than 0.5% over 8 months.

What went up? Ajanta Pharma and R.S. Software, both stocks accumulated in the last 3 months. Clariant, another favorite of mine. Muthoot Capital Services, Balkrishna Tyres, Bharat Forge, IRB Infra and Mayur Uniquoters. In short, a bunch of Midcap and Small Cap stocks.

Investment Performance in May 2014

Here is a graph showing my investment performance in May 2014. This investment performance should be seen in the context of the hedging that I had carried out, to protect myself on the downside in the case that the election results would be unfavourable to the markets. This is despite my being reasonably certain of the results. However, sometimes one believes what one wants to believe, and I think it was prudent to, when faced with an event that could cause a catastrophe in the markets, protect one self on the downside. What I did is that I purchased Mayend out of the money put options, with strike prices 5% to 10% lower than the Nifty and the Bank Nifty on the date of purchase. Why the Bank Nifty? Well, I have mostly small and midcaps in my portfolio, and in the case of an unfavourable result, the likelihood that my stocks would perform worse than the Nifty was a given. On the other hand, the Bank Nifty moves more closely to my portfolio, so I preferred to hedge with the Bank Nifty. I wish it was possible to trade in Midcap Nifty options, but those options are not enabled.

The portfolio performance below includes the cost of the options, which of course, given the sharp market upmove, expired without any value.

Portfolio performance cannot be assessed without understanding the risk the portfolio carries. This was one key takeaway for me from the book by Howard Marks, The Most Important Thing. In this case, the risk that I carried on May 16, 2014 (Election Results Day) was much lower than most other investors, who were not similarly hedged. Hence, if I had a lower performance than my benchmarks, I would not (or should not) have been unhappy.

With the caveat above, I present the graph below with my performance for the month.

As you can see, I had a blowout month. I far outperformed the Nifty, and the Kotak Classic Fund. I did much better than the SBI Magnum Midcap Fund.

This is also understood in the table below:

Returns My Portfolio Kotak Classic SBI Midcap Nifty
Last Month 21% 9% 11% 10%
Last 3 Months 38% 17% 17% 18%
Since Nov, 2013 55% 21% 39% 20%

Since November 2013, I have returned 55% on my portfolio. The SBI Midcap Fund returned 39%, while the Nifty returned 20%. In May alone, I outperformed all 3 of my benchmarks by at least 10%, inspite of my portfolio being hedged.

Reasons to be proud. Whether this result is due to luck in the timing or particular choice of stocks, or some small ability, we will see in the long run.

Investment Performance in April 2014

From this month, I also want to present this graph in a tabular form, to make it easier to understand. This is available below.

April was not such a great month. I only marginally outperformed the NIFTY, and probably underperformed the SBI Midcap fund, but not by much. This also brings the annualized portfolio performance into poor light, down from the over 100% run rate from the previous month.

Some of my top holdings underperformed severely last month. Cummins, Selan, IDFC, Larsen, Oberoi, Mayur, MPS, Sesa Sterlite and NTPC all fell last month, and these constitute 7 of my top holdings. I also exited Just Dial (at a loss), and MCX, though my holdings were rather small. Stocks which performed well last month included PTC India Financial Services (PFS), Clariant and Jaypee Infra.

All in all, a disappointing month. Depending on election results, we will see how the future plays out.

Returns My Portfolio Kotak Classic SBI Midcap Nifty
Last Month 1% 1% 1% 0%
Last 3 Months 23% 9% 13% 12%
Since Nov, 2013 29% 12% 26% 9%

Portfolio Composition, May 2014

As promised, the top stocks in my portfolio, at the beginning of the month. I have already published this for two prior months, and here is the portfolio as on May 02, 2014.

Notable additions during the month have been an increased exposure to IDFC. After a fairly stellar run in the middle of April due to the announcement of the new bank license, IDFC has been weak. I have taken advantage of this weakness to buy more. For me, IDFC represents an investment for 5 years, at least. Hopefully, over that period, it will become a multibagger. Right now, it is weak because a) It lends mostly to Infrastructure, and infrastructure has been a dog. People are afraid of NPA’s and rightfully so. But IDFC seems to have managed its NPA situation really well, even in a difficult environment. b) There is fear that the short term costs of IDFC transiting to a bank (increased SLR, CRR requirements, and increased expenses on opening branches) may put a lid on profitability and c) Uncertainty over the path to convert to a bank, and the likely FII dilution as a result.

For me, all of these are short term things, and ignores a) the phenomenal performance of IDFC NBFC relative to PSU banks in terms of NPA’s  b) the excellent performance of IDFC PE Fund, IDFC AMC and other subsidiaries. and c) the increased long term profitability resulting from an ability to get CASA deposits.

My largest purchase is the month has been another AMC, IL & FS Investment Managers. I really like the Fund Management business. Once you get a fund going, you have a fixed income for several years, and in addition, you might just get additional income from Carry. IL & FS has a great track record, gives excellent dividends, and I think this will continue, especially if the Indian Investment Climate improves.

Another stock which has underperformed in the last month in Oberoi Realty. While all realty stocks have done poorly, Oberoi has done badly too. I expect the May 10 results to be poor (probably the last set of poor results), and if so, I will buy into the price dip.

This month, I also bought Clariant Chemicals, adding to my earlier position. I think that my initial purchase of Clariant was sound (around 580 levels). I am not sure my current purchases are sound. I will put up a detailed note on Clariant once the March results are out. However, I am holding on, since I expect a dividend of 350 to 400 Rs., and I could use the tax free income, and subsequent stripping loss.

This month, I added to RS Software and Munjal Showa, though the positions are still too modest to show up here. I will keep adding to these positions.

Stock Latest Price Inv. Price Overall Gain % % of Portfolio
Selan Explore 497.6 315.5 57.71 3.9
Cummins 524.45 404.1 29.78 3.7
IDFC 110.55 107.3 2.99 3.6
Balkrishna Ind 528.3 231.2 128.48 3.0
Larsen 1,263.55 949.9 33.01 2.5
ILandFS 13.7 13.6 0.64 2.5
Kaveri Seed 656.35 296.6 121.26 2.4
Oberoi Realty 208.05 177.6 17.14 2.4
Mayur Uniquoter 288.6 111.0 159.92 2.3
Sun Pharma Adv 170.45 121.9 39.8 2.3
Clariant 705 615.9 14.47 2.3
NMDC 152.2 121.7 25.11 2.3
MPS 363.75 123.4 194.85 2.2
NTPC 114.45 131.6 -13.02 2.1
Sesa Sterlite 180.55 151.0 19.57 2.0
Hind Zinc 126.1 121.0 4.21 1.8
Tata Inv Corp 477.1 405.0 17.81 1.8
Jaypee Infra 24.85 18.6 33.48 1.7
EID Parry 152.35 139.7 9.09 1.7
ITC 340.25 301.0 13.05 1.7
IRB Infra 115.8 81.3 42.35 1.7
Bharat Forge 406 272.3 49.13 1.7
eClerx Services 1,239.80 757.3 63.71 1.6
Reliance 928.1 756.1 22.74 1.6
ICICI Bank 1,252.40 933.8 34.12 1.5
Sobha Developer 377.3 288.6 30.72 1.5
TCS 2,208.45 1771.2 24.69 1.5
Indian Hotels 70.95 53.3 33.2 1.4
Poly Medicure 481.25 278.4 72.89 1.4
Bajaj Electric 287.75 209.8 37.13 1.4
Munjal Auto Ind 52.95 34.0 55.77 1.4
PI Industries 249.65 144.6 72.61 1.3