“The scream” painting by Edvard Munch ‘Market has risen too much too soon, a crash can come anytime. I have started selling’ ‘I am raising 20% cash (i.e. selling 20% of my portfolio in one shot) as the market seems heated’ ‘Valuation seems too expensive so I will not enter the market now & will wait for a correction’ These are some of the common statements I have heard from different individuals I have interacted over the last few days. Each has their risk appetite & their unique way of dealing with it, but hearing these things triggered certain thoughts in my mind and hence this post ..read more

‘Market has risen too much too soon, a crash can come anytime. I have started selling‘ ‘I am raising 20% cash (i.e. selling 20% of my portfolio in one shot) as the market seems heated’ ‘Valuation seems too expensive so I will not enter the market now & will wait for a correction’ These are some of the common statements I have heard from different individuals I have interacted over the last few days. Each has their risk appetite & their unique way of dealing with it, but hearing these things triggered certain thoughts in my mind and hence this post. — Indian market is at a lifetime high ..read more

Following is a copy of an Investor Memo shared with Treasure Trove subscribers We have received feedback from some subscribers questioning & wondering if we made a mistake by exiting businesses like Mrs Bectors (2x) & Sanghvi Movers (5.3x) early. It is natural to feel this way given these stocks have continued their run-up after our selling and it can feel like that we left too much money on the table. But this is clear only now i.e. in hindsight. At the time when these decisions were being made, we did not have the benefit of knowing how exactly the future would unfold, henc ..read more

The stock market is like a pendulum that swings from one extreme to another. While it often comes to the center, rarely does it stay there for long before moving to either of the directions. This cycle of greed and fear is what generates attractive opportunities for value investors with a long horizon of 3-5 years. However, it is crucial to identify when the cycle for our stock is approaching the other extreme so that we are able to start taking money off the table. The absence of a disciplined selling strategy can lead to large drawdowns and one can get stuck for longer with sub-op ..read more

In April 2022, we published an important subscriber memo titled ‘Wise to Optimise Expectations & Review Asset Allocation’ While the two pillars of the bull market: Liquidity & Growth are slowing, Export is the bright spot. Following are some edited excerpts from the same. After crashing in March 2020, markets have been on steroids ever since, which implies the ongoing bull market is now two years old. The last six months though have been tepid for markets, but thanks to some outliers in our portfolio like Usha Martin & Gujarat Ambuja among others, the portfolio has continued to sh ..read more

In this post regarding investing in commodity businesses, I cover the following: Natural vs Processed Commodities, 10-pointer framework/takeaways based on our experience, How our stock-picking has evolved and current commodity positions in the portfolio.  We broadly divide the commodity universe into two categories – first is Natural Commodities (/Resources); these are nature’s gift to mankind. All one needs to do is just extract these and sell to the customers. Some examples of natural commodities include minerals like iron ore, coal, oil & gas, limestone, agricultural produce like ..read more

We bought APL Apollo at Rs 1,269 a share, in Oct 2018, and recently exited at a price of Rs 1,258 a share, however after the stock split of 5 for 1. At an unadjusted price of Rs 6,300, the stock has been a 5-bagger for us in 2.5 years. It’s been a great ride and we love the extra-ordinary execution by the management team in an otherwise slow-growing commoditized industry. We had hoped annual volumes to move closer to 2mn from 1.1mn, EBTIDA per ton to move from Rs 3,000 to over Rs 4,000, and net profit to move from 150 Cr towards Rs 400 Cr. Luckily the thesis played out perfectly and the market ..read more

A couple of years ago I had the opportunity to present on Gujarat Ambuja Exports Ltd. at Tamil Nadu Investors Association’s 20:20 conference held in Chennai. I had under half an hour to explain the entire business model, investment thesis along with upside triggers, management assessment, valuation, the risk & concerns, among other pertinent factors. The video is there on Stalwart Advisors’ Youtube channel, the link is shared at the end of the post. This post is a brief update on how (or not) the thesis is playing out. But before I jump to that, let us do a quick recap of what the company ..read more

A few years ago I had made a thematic presentation ‘India’s Consolidation Wave’ at Flame Investment Lab, Pune. The basic idea was to demonstrate using actual data from multiple industries that how some of the better-run companies were consistently growing faster than the industry and hence winning market share from their smaller/weaker/inefficient counterparts. At that time, I highlighted some of the key enablers supporting this trend – brand, distribution, and economies of scale. Later when Demonetization happened in 2016 and GST got rolled out in 2017, the ‘Unorganized to Organized’ bec ..read more

(Following is a copy of Memo shared with subscribers of SA’s Model Portfolio) Starting this earning season i.e. of Q4FY20 (& beyond), we would hear a lot of exceptional items in the form of loss of revenue and profits due to lockdown, increased operating expenses, changes in the way businesses operate, etc. For some businesses like Wonderla Holidays, the impact of lockdown is extreme – All its parks are closed and revenue will be zero until they reopen, while a significant cost base is fixed in nature (salaries & maintenance) so the company will report losses for this pe ..read more