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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  1. Since Mr.Subra is speaking about individual stocks, best time to join the bandwagon and put my thoughts too…

    You can take a look at City Union Bank (CUB), one of the fastest growing banks in South India, with an excellent management. Have enviable high quality assets, with one of the least NPAs and high levels of profitability. Its current PBV is 2.8 and is one of the potential acquisition targets.

    Bank of Rajasthan (BOR), a loss making, low quality asset holding, with not so great management was taken over by ICICI bank at a PBV of 5.5 times. So CUB may get better PBV if it is acquired.

    I’ve already written about IDFC & Karuturi Global. So no need to repeat the same again.

    Disclaimer: I hold relatively large number of shares in IDFC (@Rs.50), CUB(@ Rs.24) and Karuturi(@ Rs.6) and has vested interest in the above comment. I would not be telling you when I would be exiting these counters. Any decision you take is at your own risk. As Mr.Subra said, let the buyer beware!

  2. @MUTHU
    CUB is a good bank, i agree, me too had at an average price of 14 recently sold it for 42,it was a three bagger for me within span of 18 months.
    Do u know the reason why it gets low valuations compare to the other banks?
    @SUBRA
    After following your blog for long and reading your experiences i am convince that inactivity is the name of the game for creating wealth….recently i have created FOREVER portfolio…in which i have transferred few scrips which i would be holding forever…InshaAllah….

  3. I remember to have seen a new posting yesterday regarding some forgiveness day for Jains and Mr.Subra has aplologized for the sins he has not committed!!! Now I see the posting missing. I hope I’m not feeling sleepy and over looking some thing as it is 4a.m in the morning.

    Mr.Subra- What happened to the posting? Decided to withdraw your apologies? Any how, we don’t need one from you. And I hope you were not serious about seeking apologies. or were you? If you remove the ‘negativity’ from your writing, you would become little boring!

  4. Asoke – I’m pleased to inform you that I’m not following Mr.Subra. As he himself has acknowledged, people come and listen to him and then do what they feel like doing. Poor Bhishma!!

  5. hi Muthu,

    i moved that post to Facebook…I must have hurt far more on FB than on my blog..:).

    Apologising is a great way to reduce stress – and frankly I need to do it to keep my ego in check…do you see anybody criticising my writing (even my paying clients do not, some just stop paying)..

    and I think this concept of Michhami Dukkadam is just fantastic…will bring it back in a day or two

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