No, this is not a post…just a FB type of a comment.
When a public issue of L&T Finance was announced (about a year back?)…many of the employees of the L&T group called me. Many of them were thrilled that they would be getting some ‘fixed quota’.
I am not sure if I could have got some shares too at Rs. 52 if I had pressed the right buttons on my phone. Even the merchant banking fraternity was not terribly excited, but were sure that the issue would go through.
A few people asked me ‘Should I apply’ – I played the typical ‘how does it matter’ card saying ‘It is a part of a big Engineering company…blah blah…’
Then the tougher question: “Are you applying”
This was a more direct question. I said NO.
So the obvious “Why?” and I said “The best shares in the business are ALREADY in my portfolio, why should I buy the also rans?”
Most of them gasped. Frankly when I had Hdfc and Cholamandalam in my long term wealth creators I did not see any reason to pick up other finance shares. I have played long in these shares – but have NEVER hesitated to sell and buy back at much lower prices. However this game I play on a small portion of my portfolio.
Most of the gaspers said ‘But Hdfc is already high, Chola best is already over….blah blah….’ Now a year or 13 months later, I am happy with my choice. I said I do not have to look at it from today’s point of view. I have to look at it from 2017 or 2022 point of view. At that stage I am sure LnT finance would have done well, but Hdfc, Hdfc bank and Chola would have given similar or better returns, with lesser volatility. I am not saying LnT finance is not a good share, I am just saying that I already have shares better than LnT from the price point of view. And I prefer owner (family) driven finance companies to ‘professionally’ managed finance companies, and in 2022 I will be proved right.
Similarly when somebody offers me fertiliser shares I retort – I have Coromandel International and Tata Chemicals…
Recently when the government came with some really lousy (harmful to the soil in the long run) fertiliser policy, I sold Coro. Do I think Coro or Tata Chem should NOT be there in my portfolio? For heavens sake NO. I must have sold about 25%….and have ACTUALLY bought EID Parry (which holds 65% of coro fert!), and have stuck to the older EID parry already lying with me.
Tata Chemicals I did not even see the price fluctuation – it is a part of my dad’s portfolio – and continues to remain there for a few decades. One bad policy / good policy does not make any great change in my view.
So if somebody tells you..’Fertilisers is a dull boring industry, ask them to see the CAGR of Coro Fert over the past 10 years’. And fertilisers (like all commodities) give you fantastic trading opportunities too.
And if somebody asks you to buy a share in an industry where you already have the leader in your portfolio, just chill.
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