Portfolio Composition: March 2014

Let me share something I am ashamed off. My portfolio has more than 50 stocks. It is such a large group of stocks, more like a mutual fund, that it is likely to give only mutual fund like returns.

On another occasion, I will discuss the theme of Concentration and Diversification. At the moment, let me state that my objective is bring down the number of stocks to less than 20, with the top 10 constituting 60% of the portfolio. However, there are lots of constraints in achieving this-my tolerance for risk, the fact that I may have to pay short term tax if I sell things with less than a year’s holding, and the fact that some of my stock is pledged. Hopefully, after July 2014, I will have less of these constraints. I also have to curb my enthusiasm for various stock stories.

Anyway, this is my current portfolio, along with the purchase prices, and the approximate average holding periods:

As you can see, the average age of the portfolio is only 6 months. And these 25 odd stocks also constitute only 60% of my portfolio, by value!! Tells you that my investing journey is still nascent. And I am in desperate need for trimming a whole bunch of stocks. Also, most of the best performances are from MPS, Kaveri Seed, Mayur Uniquoters, PI Industries. These are all ValuePickr stocks. The biggest loser is NTPC. I kind of got blindsided with the new CERC norms. However, it pays decent dividends, so I have kept it. Perhaps before March end, as part of tax planning, it will go. The other negative figure is in IDFC and in Hindustan Zinc. IDFC is a stock which I am accumulating, to test the theory that you buy stocks of good companies when they are down because of some extraordinary set of events (Infra Slowdown, Gas Shortage, and FII limit revision due to Bank License Application), and I hope it will rebound very well in the future. Hindustan Zinc, in my opinion, is simply undervalued. It gets confused with Vedanta group debt woes, and the constant tussle with the GOI regarding sale of its stake. At some point, in the next year, I think both of these will get resolved. So, I intend to hold on to both IDFC and Hindustan Zinc.

The table below has the average purchase price, the gain/loss in percentage,(as on March 4, 2014) the value of the stock as a percentage of the whole portfolio, and the average holding period. The return for IDFC is wrong-it is not zero, but -5.5%.