As readers know by now, I have 3 portfolios namely Debt, Mutual funds and stocks. My Debt equity allocation is roughly 1:1 and between stocks and MF it is about 3:2 in terms of the current portfolio. It is interesting to note that my investments in stocks and MF have been nearly the same over the years. This means that my annualised returns from my stock portfolio is considerably more than that of my MF portfolio.
This brings me to the reason as to why you must have both an MF and a stock portfolio. Stocks can grow from the underlying business doing well. However, they can also grow through bonus issues, splits, mergers, acquisitions and Value unlocking to existing shareholders. In fact, stocks where I have the highest returns are mostly through these routes. More on that latter but first let me outline how I measure the success of any stock in my portfolio. I understand that XIRR calculations will be the easiest way to do this but I just take the multiple by which the current price is to the average purchase price. This is as I have realised that over a long time period this is a pretty accurate measure.
With that said here are the highest multiples in my stock portfolio:-
- HCL Tech, Adani Ports, CG Consumer, Reliance, Aditya Birla Fashion, L & T, Ultratech Cement where returns are from 200 times to 15000 times. This is clearly caused by the fact that I paid virtually nothing in acquiring these stocks. For example I got 66 HCL Tech shares as I has HCL InfoSystems shares. With Bonus and Split these have now frown to be 264 shares. I got Ultratech Cement as I was holding L & T shares.
- Multiples of 75 through 125 are achieved in the following shares. The gains are due to selecting the right company at the right price as well as related corporate action such as bonuses and splits etc.
- Berger Paints
- Kansai Nerolac
- Piramal Enterprises
- Multiples of 50 through 75 are achieved in the following shares.
- Vinati Organics
- Apollo Hospitals
- Himatsingka Seide
- TVS Motors
- Apollo Tyres
- Multiples of 25 through 50 are achieved in the following shares.
- Tata Motors
- M & M
- Petronet LNG
- Greaves Cotton
- Hindustan Zinc
- Tata Chemicals
- PC Jeweller
- Bharat Forge
- Sun Pharma
I am a little reluctant to provide actual figures but you will be able to understand the scale of the gains. Just as an example, my buying price in Berger Paints is 19.63 and the stock is trading at 262 now. Of course, I have had several spectacular failures too such as Unitech, Kingfisher Airlines, Teledata, Karuturi Global etc. On the balance things have worked out rather well and enabled me to achieve a state of Financial independence by the time my son had just started his Graduation course.
My recommendation is you start with a stock portfolio right now if you have not done so already. You have to do it on your own learning from Facebook groups or Blogs will not be enough. Start small if you are conservative at heart but do get started.
I knew very little about stocks when I did and it has really worked well for me.