My successful stock picks – a sample

Of late I have been inundated with a lot of requests for sharing my stock portfolio, the price at which I bought the stocks etc. I think these come from two categories of people – some who feel they would be able to learn something from what I had done and others who want to check and probably tell me what I had done wrong and why. Be that as it may, I think both of these types will not get what the want from what I am about to share. These picks are mostly at an earlier point of time and has to be seen in the context of how I operate. However, they do provide some general learning, which may be of use.

Let me start with Mindtree, one of my stock picks in the IT space that I have been very happy with. The details are:-

  • I started investing in Mindtree in July 2007, as it looked to be a rather promising Mid tier IT company. I knew some people in charge there and was confident that the company will do well in the long run.
  • My starting price was 663 and the stock started correcting immediately thereafter. Between 30/7/2007 and 1/11/2007 the stock went down from 663 to 463 and I made a total of 6 purchases each for the same number of shares.
  • My final purchase was after the turmoil of 2008 at a price of 318.
  • After the split my shares doubled and the price was 1500 plus . This was a multiple of 4+ on the invested price. Subsequent to another bonus the CMP is nearly 600 now.
  • I am pretty sure that over the next few years a price of 1000 or so is very achievable for the stock.
  • Mindtree is a good dividend paying company and that is separate from the above.

The next company is the Pharma company Dr Reddys Labs. The details are:-

  • I wanted to have a few Pharma blue chip companies in my portfolio and DRL was an obvious choice.
  • Like Mindtree, most of my investments in DRL were between July 2007 and March 2009. The acquisition price started at 632 and went down to 379 for my last purchase. Average cost of acquisition was 540 Rs.
  • The CMP of DRL today is 3012 Rs and I expect it to go up to 5000 plus in the next 2-3 years.
  • The gains in the stock are of the same scale as those of Mindtree.

The next company is the Automobile market leader Maruti. The details are:-

  • I wanted to have Auto sector represented in my portfolio and Maruti was an obvious choice here.
  • My first purchase was at 741 Rs in June 2007 and the last one was in October 2008 at 515 Rs.
  • CMP of Maruti is nearly 5000 today and it is very likely to cross 6000 in this FY itself.
  • My investment today has multiplied more than 7 times.
  • On an average I get about 20000 Rs dividend per year from this stock.

The next company is also from the Automobile sector and it is M & M. the details are:-

  • I chose this as it complemented Maruti in the commercial vehicles space.
  • I started buying M & M in March 2007 and kept buying till January 2009. My starting point was 723 Rs and the last price I bought it for was 263 Rs. You can imagine the kind of bargain there was, but there were hardly any takers!!
  • After the split adjustment, the current average price is 286 Rs
  • CMP of the stock is 1243 Rs and expectations are for it to reach 2000 Rs sometime in 2016.
  • My investment in this has again multiplied nearly 5 times.
  • This again is a good dividend paying stock, normally declares dividend every quarter.

L & T was my first CD bought way back in 1992. See how it has done so far:-

  • I got 75 shares at the price of 60 Rs each in 1992. This went through bonus/splits etc and today I have 225 shares.
  • This is after I sold some shares in 2007 for 75000 Rs.
  • CMP of L & T is 1518 Rs today and my total realization on a 4500 Rs investment is more than 4 lacs.
  • This is exclusive of the good dividends that L & T normally announces every quarter.
  • There will also be a lot of value unlocking in L & T shares when some of it’s subsidiaries get listed in 2016.

I could go on and list many more but you would have got the point. Of course, I have had spectacular failures too – some of them are Kingfisher Airlines, Reliance Infocom, Teledata Informatics etc. Several of the Infra companies are also not doing well at all but that is a long term play and I am still hopeful of them succeeding.

Many people ask me why I did not continue investing in stocks post 2009 in a significant manner. Firstly, my priorities got focused on my job as CEO of a global company and on my children’s studies as they were getting to a stage where I had to think of their college admissions. Secondly, I thought I had built a good enough portfolio and now it really had to be maintained over a long term. Thirdly due to my thoughts of giving up my corporate career, I needed to invest more in MF and debt products. All such investments have happened since 2008 onward. Finally, after we settled down in Hyderabad my wife got into building a portfolio of her own, though she only holds stocks for short term. Now, I really act as an adviser to her, though it is not easy for us to agree on what price one should buy or sell a stock.

My advise to all investors who are still wondering whether to start with stocks or not – go ahead and begin building a good portfolio over a period of time. Even if 50 % of your picks are successful you will gain much more than any other mode of investment. I absolutely know this in my case and I am sure it’ll be true for you as long as you choose good companies to invest in. No great tips or analysis of ratios is needed – just start with the market leaders first.

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32 thoughts on “My successful stock picks – a sample

  1. I have 2 things to ask.
    1. Did you always average when stock price is down.

    2. How do you decide the next purchase price. Is it some fixed trigger. for example when stock price moves down by 5 %. It could seriously send jitters for a retail investor when initial purchase ~650 and stock tumbles then to 318

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    • I have rarely bought stocks when the price was more than my average price at that stage. It may make sense at times when a stock id really flying high and you feel the need to get into it. For my own case, I always believe that if one stock is not affordable then there will be similar stocks that I could invest in.
      I do not have a formula but make an assessment based on money availability and the drop in stock price. For the time period mentioned, I would buy Maruti or M & M in alternate months depending on which had dropped by how much.
      I never had any jitters as they were good companies and were bound to recover sometime. You will never be able to build a portfolio if you want to have only winners in it. As long as you are getting something like 6-7 out of 10 correct, you will be doing quite well.

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  2. The next term of the current government, or whoever wins the next election, would give solid economic growth for a variety of reasons. It may be a good idea to start nibbling at direct equity whenever your selected basket of stocks declines by around 10% from current levels.

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  3. Good post sir.

    Very sensible advice to focus on the market leaders for beginners. Most capital loss in the markets is in the search of the next “multibagger” which makes the investor a multi-beggar.

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  4. I guess instead of asking specific tips we should learn the stock framework itself.
    Sir,
    coming to capital allocation, how much you allocate maximum/min per sector and max/min per stock.

    Also how do you decide when to sell the stock

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  5. Dear Sir,
    1. How do we make sure we always buy the stocks in cheap price, is this possible at all? Or it make sense to buy every quarter?
    2. Stocks like Maruti Suzuki are a bit expensive(4000RS+) through this is a good stock to hold, do you think one should still invest in them? Even if I aim to invest 1lakh in this stock I will get only 25+ stocks so want to know what you think?

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    • Read my latest post on 200 DMA and you will get some ideas about what price to buy. It is certainly possible to buy stocks at a cheap price but it requires patience and checking the market with some knowledge.
      It does not matter what the absolute value of the stock is, the growth potential is important. If you can start with even 5 shares of Maruti and add over time it will be good. I never bought DRL shares more than 10 at a time.

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  6. Dear Sir,

    Thanks for sharing your journey, you have nicely shared – What happened and what you did and what was the outcome.

    It would be a great help if you can (if possible) add a why to it (in case you managed to record it or currently remember it)

    What happened -(not much in your control)
    What you did- [sold off / averaged / increased stake]
    — Why you did is the nectar for us who want to learn—
    What was the outcome (not much in your control)

    Thanks & Regards,
    Mukul Jaggi

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  7. Dear Rajshekar. Did/do you look at book value and Pe of the stocks,else what are the parameters you look into?

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  8. Thank you for the detailed post on your stock picks. Please do also list stocks that are priced at INR 1000 and below for small retail investors to invest and earn decently.

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  9. Good day,
    I have really became a fan of your blog after reading the contra way of investing in MF {doing lumpsum on dips}.
    I am quite naive at equity and make a lot of blunder’s at it. Presently am not investing in direct equity for last 7 yrs. I want to understand the basics of equity investing.1. Hoe you select tge companies for purchase?
    2. What’s all stuff needs to be verified?.
    3. How to decide which is entry and exit price?
    4. If after buying as in your post also, price of share drops then should i buy more? If yes what factors should i check before to ascertain this?

    Thank you very much with your wonderful blogs with real life incidents. I wish you keep writing the blog for reader like me who benefit a lot.

    Have a nice day and best of luck.
    Thanks
    Ritesh

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  10. Hello Sir,

    Thank you for sharing your post. I want to build portfolio but the price of mentioned company’s share is already increased very high. I will be great full if you can suggest some stock for long term.

    Thanks,
    Dhiraj

    Like

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