Investment Performance August 2017

The market turned distinctly weak in August 2018. All the major indices fell, with the Bank Nifty falling by more than 3%. Continued FPI selling, tepid results, GST related disruptions and continued geopolitical tension was somehow contributory to the relatively tepid movement.

Investment Returns
Investment Performance August 2018

Except for the SBI Small and Midcap Fund, all the other benchmarks, as well as my own investment performance had a negative performance for the month.

While my investment performance continues to trail the SBI Small and Midcap Fund (this stands to reason: Small and Midcap Stocks have outperformed the Large Caps, and while portfolio is geared towards Small and Midcap Stocks, I have several large caps, like Reliance, ITC, L&T, ICICI Bank in my porfolio. Naturally, my portfolio performance is a cross between the Small Cap Performance and Large Cap Performance), it does outperform all other benchmarks.

The performance of the PMS schemes is particularly distressful. I would imagine that PMS managers should outperform my own investment performance, or those of MF managers (who charge much less). But in fact, PMS schemes have clearly underperfomed this year. Now, it may be that some manager did outperform, it does not appear so for the average of all managers. And those who do outperform, don’t seem to do it consistently over a long period.

My portfolio continues to underperform a bit because of the drag from IDFC, IDFC Bank and EClerx, which are in my top five holdings. On the other hand, outperformance by Bajaj Finserv, HPCL, amongst other stocks, allows be to clock in respectable performance.





Trading Returns and Performance-July 2017

Trading Returns and Performance

July 2017 was a great month for my trading performance. Here is a table which shows the trading returns over the last nine months.

Portfolio Returns
Table of Returns for different time periods

As can be seen, my trading activity gave a return of 59% in July 2016 alone. This was in conjunction with a rise in the bank nifty of 8.15%. However, as I kept withdrawing capital from trading and deploying it in debt, I am not clear as to what the trading capital showed be considered. In any case, trading activity for me is a business which created income, not a wealth generating activity. Hopefully, wealth will get generated through my debt, equity and real estate portfolio. So I am far more interested in the absolute returns from my trading activity.

This month, I also started trading commodities in earnest. The total capital set aside for commodities is still a fraction of the total for the Bank Nifty. Hopefully, over a period of time, this shall rise.

Currently, I am trading Crude/Natural Gas, Gold/Silver, Zinc/Copper. I feel that trading a basket of instruments shall improve the stability of my trading performance. However, I am still not confident of increasing the position size of the commodity basket.  Over a period of time, I shall slowly increase this.

Below is my trading equity curve till July 2017.

Trading Performance
Trading Equity Line for the last nine months (Normalized to an arbitrary base)

What about drawdown? Well, in July 2016, there were several days where the trading equity was at the maximum, and there was no drawdown at all.

Here is the drawdown:

Trading Drawdown Curve (Normalized to an arbitrary figure)

All in all, a very satisfying performance in trading activity in July 2017.

Trading and Investment Performance-May 2017

Trading Performance May 2017
Investment Performance May 2017


Again, after a haitus, I present my trading perfonmance and investment performance.

Here is a graph of my performance, both for trading and investment, in comparison with various benchmarks. The benchmarks I have included are the performance of the HDFC Top 200 and SBI Small and Midcap Funds, and two PMS’s I have invested in, the MOSL Value Strategy, and the Centrum Deep Value Strategy, in addition with 3 indexes.

Performance of trading systems and investment gains
Trading Returns and Investment Returns

As can be seen, the trading has had a great last few months. However, there is a caveat here. In my base calculation for capital employed (i.e., the 1000 figure in November), for trading, I have only included the actual capital employed in my brokerage accounts, and not the shares pledged as margin, or the reserve cash I hold. Still, all in all, a creditable performance.

My investment performance in the last seven months is also not bad, second only to the HDFC Top 200 Fund. I otherwise beat both the PMS’s and the indexes handily.

What risk did I take to get these stellar trading returns? Quite a bit. Please see below:

Trading Equity Line
Absolute trading equity line.

As can be seen, there is a deep drawdown in the months of October and November 2016. This corresponded to three external events, Brexit, Trump Election and Demonetization. Such deep drawdowns are what keeps one afraid of trading in futures. I have since changed strategies (more in another post), and hopefully, I can avoid such sharp drawdowns in the future.

Trading Equity Drawdown
Drawdown of Equity from Maximum Equity

Portfolio Composition at the end of June, 2014

I am trying to maintain the discipline of disclosing my portfolio over the weekend after expiry in every month.

Notable purchases during the month include a significant increase in my holdings in IDFC and Oberoi Realty, and an increase in my holdings in Idea Cellular and an initial position in Tata Global Beverages. I also bought a reasonable amount of Sabero Organics as a special situations play. Amongst small caps, I created small positions in Morganite Crucible and Mazda Engineering. I trimmed my holdings in JP Infra and in Alkyl Amines.

I have too diversified a portfolio. Over a period, it will only became like the Nifty Junior. I am therefore trying to increase the concentration in my portfolio, and for the moment, two stocks, IDFC and Oberoi Realty are in my focus. I intend to increase my holdings further. I will give an investment thesis on both next week.

I am also increasing my exposure to Idea Cellular, though at a slower clip than the above two. The reason is simple, telecom stocks have got back pricing power, and the eminent entry of Reliance Jio, to my mind, is an overblown fear. Reliance has not demonstrated that when it comes to engaging the consumer that it is better than competitors. This is true for its previous telecom foray, as it is true for its retail foray. I have little doubt that they will be a serious player in the telecom space, but existing telecom players are not going to roll over and die. Idea’s balance sheet is the best amongst Bharti, RCom and Idea, and it is executing its plan well. This can be a FCF business of high proportions.

Sabero Organics was bought mainly from the point of view of merger with Coromandel International. The merger should not happen within a month or so, and buying Sabero today means buying Coromandel at a 7% or so discount.

Stock Latest Price Inv. Price Overall Gain % % of Portfolio
IDFC 128.35 112.35 14.24 4.05%
ILandFS 23.4 13.81 69.46 3.50%
Selan Explore 594.5 317.72 87.11 3.46%
Oberoi Realty 259.1 204.00 27.01 3.36%
Larsen 1667.3 949.93 75.52 2.48%
Cummins 639.3 406.70 57.19 2.47%
IRB Infra 224.6 81.35 176.09 2.44%
Balkrishna Ind 735.9 232.34 216.74 2.43%
Sesa Sterlite 289.35 150.99 91.63 2.32%
Mayur Uniquoter 374.5 111.03 237.29 2.25%
Clariant 861.05 617.20 39.51 2.12%
NMDC 178.95 121.65 47.1 1.96%
Kaveri Seed 721.2 296.64 143.12 1.96%
EID Parry 209.4 141.47 48.02 1.93%
Bharat Forge 608.25 272.25 123.42 1.87%
Hind Zinc 163.9 121.00 35.45 1.76%
Ajanta Pharma 1522.6 1007.73 51.09 1.65%
Sun Pharma Adv 160.25 121.93 31.43 1.61%
MPS 345.45 128.66 168.49 1.59%
eClerx Services 1159.8 866.27 33.88 1.56%
Indian Hotels 102.3 53.51 91.16 1.56%
Tata Inv Corp 547.15 404.99 35.1 1.55%
NTPC 152.25 130.22 16.92 1.55%
Sobha Developer 511.55 288.64 77.23 1.51%
Munjal Auto Ind 78.5 33.99 130.93 1.48%
Oriental Carbon 269.9 113.21 138.42 1.46%
Syndicate Bank 157.85 69.59 126.83 1.29%
ITC 319.75 304.43 5.03 1.28%
PI Industries 329 144.63 127.48 1.28%
ILandFS Trans 206.8 134.39 53.88 1.28%
Reliance 1012.1 756.12 33.85 1.27%
PTC India Fin 31.55 13.93 126.5 1.27%
ICICI Bank 1384.65 933.81 48.28 1.26%
Tata Steel 518.9 274.05 89.35 1.23%
Grindwell Norto 408.25 231.16 76.61 1.20%
Muthoot Cap 156.75 94.02 66.72 1.20%
Bajaj Electric 336.5 209.83 60.37 1.19%
TCS 2399.55 1771.20 35.48 1.19%
VST Tillers 1766.55 421.86 318.76 1.17%
Banco Products 115.4 56.16 105.48 1.09%
Poly Medicure 503.35 278.36 80.83 1.08%
RS Software 276.4 206.52 33.84 1.07%
Sasken Comm 220.45 180.30 22.27 1.07%

This constitutes 79% of my total portfolio. I am disclosing those stocks which constitute more than 1% of my portfolio. IDFC has gone up from 3.4% to 4.05%, even without any price increase. Oberoi Realty has gone up from 2.4% to 3.4%. I fully intend to have both of these at 10% within the next 2 months.