Hits and Misses of Past Six Years
Other than overseas equities in which I am still building position here are list of major hits and misses.
1) Zylog: I had researched that company had REAL business, REAL employees, REAL deal but overlooked the management and books.
Company was sold in pieces..
Lost 3% of Capital at 10%allocation.
2) Simran Farms: Bought at 20 Rs at MCAP / Sales ratio of 0.1.
Was not a loser but made only 30% after holding for over 1.5 years.
3) VIKAS WSP: Bought at 70 INR, sold at 40 INR, lost 4% of capital at 10% allocation. Fracking industry returned several multibaggers in the United states in 2012, 2013 but B.D.Aggarwal’s heart throbs for farmers and not investors. Happy to pay 100 Crore donation cheque for hospital but not a 13 Crore dividend cheque to shareholders.
4) OMNITEX and PHOTOQUIP: Did not lose capital but opportunity cost by holding them.
5) CRAVATEX: FILA isn’t as premium a brand and profitable. Trading margins thin. Did not lose capital but opportunity cost by holding them. Infact made 70% but did not sell at highs of 800 but at 300-400 post correction. POLAR was a monopoly in heart rate monitors but business size is quite small. Companies like Jawbone are likely to give a tough time to POLAR.
Similarly, Johnson Health Tech is third biggest company that is one of the principals of Cravatex but competition in health equipment is intense in India.
Global #1 Golf brand Titleist acquisition materialized for FILA Global but did not traslate to business for Cravatex.
Despite the mistakes, portfolio construction saved the day.
A long series of two-three baggers and an occasional 10-20-30 bagger returned ~46x of the original equity portfolio since 2008. 90% Cagr from 2007-2011, 50% Cagr from 2011 – 2013, 300% CAGR in 2014. 1 Lac INR turned to 46 Lac INR ( 1* 1.9* 1.9* 1.9* 1.5* 1.5 * 3 )
Some of the help in compounding came from:
MONEY MATTERS (renamed to CAPRI GLOBAL)
Sorry if you only bought the losers amongst my recommendations and not the winners.
About 20 stocks are not mentioned above which did not become either big time winners or losers such as Josts Engineering, Empire Industries (except in 2014), ICRA.
One word of caution: If you cannot digest 10% losers in portfolio, invest only in Nestle, Unilever, HDFC and the ilk.
In equities large caps make money, small caps makes moolah, trading, speculating holding for two months makes money, sometime holding patiently for a decade is futile. In the absence of a prosaic formula it will continue to be an adventurous game of trial and error. Find what suits your temperament.
For example people cite investing for long term makes real wealth, that did not fructify for HUL and GSK investors who did not see a return of dime for 10 years in India. Another example people cite from Jesse Livermore is “it was my sitting patiently that made money”. In my past seven years I made less money by sitting patiently but made more money on Poddar Developers by allocating huge weight 250 INR IN 750 INR OUT. I made biggest money on that trade of 3 months.
For the partnership fund however, biggest money and biggest weight eventually came by Buy-and-Hold for couple of years on Atul Auto, Wim Plast, Cera and Bajaj Finance. Buy and Hold gains did kick in on Kovai Medical recently. Proving that both trading and investing works.
However, I have toned down my expectations and quite content with 15-17% returns with less portfolio churn, primarily in market leaders or near-monopolies of other emerging countries.
Average holding period in portfolio was 2.5 years. I expect that to increase to ~5 years now with lower returns.
If you are looking for an ace investor cum trader in India, follow Safir’s blog.
I have myself lost 100% of my investment in a UK Bank, Northern Rock in 2008 roughly ~20,000 Dollars.
Always remember the game of stock market is not to make money slowest, surest, fastest BUT a game to be enjoyed in bull times, and to be sucked up to in bear phases. The real game is to have the staying power, to survive, to be hardy, and to forever have the wherewithal and funds to invest.
Ergo, to be Anti-fragile, you MUST invest your money in five different banks, five different brokers, and also if possible 3+ countries. If 25 equities fulfill our 15% hurdle rate, why not spread them in 4 countries ?
A few mistakes are inevitable, otherwise you are playing too safe. Don’t be afraid of few failures on the way, a necessity for growth!
Be resiliently anti-fragilely rich!
Disclosure: Invested in stocks discussed. Views are personal notions and do not represent any organisation or company. I am not an investment adviser. Investment in stock market can (and many a times do) result in loss of principal capital.