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Topic: Basant's Corner delivers 78% since launch. Posted: 04/Nov/2013 at 8:00am
Basant's Corner completed 2 years of operation on the
1st of November 2013. In this period the Basant'sTop Ten Stocks has
returned 78% in total returns while gains for the last one year has been 26%.
The CAGR for gains for the first two years has been 33.4% whereas everyone is
aware as to what the Sensex and the small and mid cap stocks have done in this
period. Please note that these gains have been computed assuming an equal
weighted passive portfolio of Top Ten stocks whereas gains for an astute and a
slightly active investor would have been higher as the top 6 stocks of the portfolio
has done a lot better than the tail a dichotomy which we will take up any day
because the top stocks matter more for a portfolio than the tailand though we have churned the Top Ten Stocks
quite a bit the overall structure remains the same because the changes happen
more in the bottom 4 stocks than in the top 6.
Even while the focus of the Basant's Top Ten set of
stocks as also in Basant's Universe remains to provide a long term view we have
continued to buy and sell a stock that has completed its objective or has met
with a roadblock which threatened to cause significant damage to the original
thesis. One such company was TBZ which was picked up at Rs 106 last year
and then as ithit 200 in the next 3
months it was recommended to reduce 50% positions and as the stock went past
270 it was put under a 'Sell' category. TBZ is currently down 50%
from that level but as our objective has been achieved we have refused to look
at the stock after the 'Sell'.
Another stock that saw a change in thesis was Titan as
when the RBI put its gold under lease model under check it put the business
model of the company under threat as its capex light model was replaced by a
capex heavy investment led model and though Titan is a world class business we
think that growing at 25% will remain under serious threat and hence we
replaced Titan with a better option capable of growing faster and available at
a much cheaper valuation and competing in a near monopoly space with years of
growth ahead of it but as with all small caps the story has to be watched
carefully and closed out on the first signs of trouble..
Each year we have had our
own share of hits and misses so while TBZ was the hit last year this year's hit
was a Rural India play which is up 72% from its recommended price of March 2013.
The misses have also been there but none in the Top Ten
so that helped a lot. In fact we do not put stocks in the Top ten unless we are
very sure of capital protection.
One bad call was Innovative Industries that was
recommended at Rs 90 and then went up to Rs140 in quick time. The stock was
than alleged to be under a scanner for some corporate governance issues and
fell in a straight line to around Rs50 at which point we threw in the towel and
said 'Reduce'. Innovative continued to fall and is now at Rs 11 all in a matter
of a few months.
Another miss was Clariant Chemical a stock that was
bought at Rs 600 on a 5% yield on the assumption and management communication
that the Swiss parent wants to use India and China as its outsourcing hub. The
parent than started selling off the plant and machinery of the subsidiary at
which point we recommended a sell on a no loss or no profit basis. The stock
fell 30% after that.
Overall the returns from the set of stocks that we keep
putting up have been satisfactory and though the market continues to move into
newer highs most of the stocks in the Top Ten have been making new highs for
the past 2 years and seem set to do so for the next many. Let's see.
The trick to
this superlative performance has been our ability to stay away from harm's way
for a majority of stocks by selling out at the first signs of danger while
extending our gains from the ones that we got it right.We continue to
make many changes to Basant's Corner and some of them have already happened
while the others are in progress. I would share those as and when we complete
it.
Edited by basant - 04/Nov/2013 at 8:10am
'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
Joined: 25/Jun/2011
Location: India
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Posts: 518
Posted: 04/Nov/2013 at 11:42am
Congrats Basantji for the splendid performance.
If you're prepared to invest in a company, then you ought to be able to explain why in simple language that a fifth grader could understand, and quickly enough so the fifth grader won't get bored.
Joined: 18/Apr/2009
Location: India
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Posts: 10
Posted: 05/Nov/2013 at 8:45pm
That's by far one of the best performances considering the broader market and if you give points to integrity and other intangible things like wisdom, it would have been 100% since launch. All the very best dear Basant and keep rocking!! You are the best.
Joined: 01/Jan/2006
Location: India
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Posts: 18403
Posted: 17/Nov/2013 at 11:43am
Originally posted by raviteja02
That's by far one of the best performances considering the broader market and if you give points to integrity and other intangible things like wisdom, it would have been 100% since launch. All the very best dear Basant and keep rocking!! You are the best.
Thank you all.
'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
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