I am not even sure whether a conversation or strategy which some of us use should be part of this blog. However as an experiment here is a trend in some of our portfolios. I have no clue whether it will work in the future, it has worked in the past – say 20 months.
Over the last few decades the family portfolio which I control and my friends portfolio which I (I think at least!) influence has a huge domination by the Tata group, MNC – as a group, Birla, Murugappa, and a sprinkling of some brilliant companies like L&T, Reliance, Hero Honda, Oracle, Wipro, etc.
In a serious reshuffle a few of us have been reducing the exposure to the Birla group – not as a design, but as a bottom up approach. Many of us are almost not there in Grasim, Ultratech, etc. The new forays into financial services, retail, telecom – none of it seems to be very inspiring. Will the high price earning ratios that old companies get (partly due to shareholder’s laziness, many shares still being in physical form, etc.) suddenly go away? Not too sure.
Only company on which a few of us have some consensus (as a buy) seems to be Hindalco. Why? We had a call at 200 in 2007 from our broker. He then said HOLD -on the way down. Then his chartists put a buy at 55. Then it went to 38, if I am not wrong. However from about 50 it has been a 3 bagger at least.
The reasons may not be far to seek – if you see the dollar slipping, turn to commodities theory. Copper and aluminium have a fantastic store value and a USE value. Unlike Gold which only has a PONZI value (you will always find a buyer at a higher price syndrome).
So if you are bullish on Gold and bearish on telecom, cement, retail, financial services, but are bullish on copper and aluminium (as a proxy for gold?)convert from Idea, …and other companies to Hindalco.
Ps: the past is not an indicator of the future. I have made millions of mistakes in my previous calls. Like I have said in the past, this is not a predicting blog, it is a blog which FORCES you to think. Of course you can navigate away if you do not like this ‘what I have done’ kind of tone…neither should you copy what i have done. At my stage of portfolio holding some experiments are allowed – some have paid some have failed.
PS: names thrown about as ‘brilliant companies’ are BACKWARD LOOKING – and personally I have no clue whether to hold on to such companies for the future. Currently most of them appear in the above mentioned portfolios, and even as we speak some of my friends may be buying puts on these very scrips, so beware. Like they say caveat emptor.
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