The 1H2010 can be summarized as return of optimism, in economy, in stock markets, stabilization of global economy, and fears about euro zone. As an individual investor, should I care about macro economics, or should I even worry about what happens to Greece or to euro currency? Ambani brothers patch up and there are stories its good for markets and business! To me, being stalwarts in India Business world, instead of setting an example, it was idiotic for them to even fight and drag each other into courts. These are good academic discussion, but I doubt it is going to help in your own portfolio. I am taking stock of my portfolio.
My last progress update was for year end 2009. This post summarizes TIPBlog portfolio update and measures progress for 1H 2010.
The status update is as follows:
- Projected dividend cash flow was Rs 20,956 (increased from Rs 15,148 in 2009);
- Yield on original investments (YOC) is 4.70% (dropped from 4.9% in 2009);
- Year-to-Date portfolio value increased by 5.1% (excluding dividends);
- Life-to-Date portfolio value is at 337% on cost basis; and
- The dividend portfolio has 13 stocks, and 1 position as opportunistic.
Following is the summary of changes that I made during 1H2010:
- Initiated new position in Sutlej Jal Vidyut Nigam Ltd (SJVNL). This was through the recent IPO.
- Initiated new position in Aditya Birla Chemical India Ltd (ABCIL). This is not a typical dividend investment. This is more of an opportunistic position. I will discuss this more in future post.
- Sold all of my position in Reliance Infrastructure Ltd. I provided my reasons for selling RELINFRA.
Some more observations and thoughts:
- I have set a goal to reach projected dividend cash flow of Rs 23,000. Based on funds available, I do have an ability to reach this goal. However, I try not to get carried away by optimism. Here, my challenge is not cash allocation, but my ability to find good sustainable dividend paying company. And that too at a price I would be willing to pay. It forces me to look harder.
- My portfolio went out of whack during 1Q 2009. I am slowly bringing down my percentage allocation to single position like LNT, ONGC, and HDFC Bank. Most of it is coming from change in value of shares in the markets. This is not due to original capital allocation.
- The total portfolio dividends have reached critical mass where I can now buy at least one or two additional stocks per year.
- Similarly, the income from this blog has also reached critical mass where I can now buy at least one or two additional stocks per year. More on this later. Meanwhile you can get some background on TIBlog ROI.
In addition, I have been pondering over reducing my position in Hawkins. It’s a coincidence that one of readers, My Income Portfolio (MIP), also asked me the same question. MIPs question was related to further additions of Hawkins shares. I am reproducing it below.
First, on a personal note, I will not be accumulating. I do not consider it cheap at 1100+.
Second, I would be skeptical of sustaining the growth it has seen in last few years. When you have a business with high ROE, less capital needs, growing market of middle class, it becomes difficult for companies to sustain that level of growth due to competition creeping up. Other than brand image moat, it does not have anything unique in its product. There are already 10s of local suppliers, which over time will beat it on product pricing. I am not saying it is a losing preposition, but the growth rate will not be as high. It will still continue to grow at slow pace. So when I think from its future earning power (discounted to NPV), I think it is likely to be a between 1100-1500. I do not have exact math but it should in that range. So, why not cash it now itself? Basically, the notion that it is high enough to sell based on my future expectation/guesstimate. I could be wrong on future expectation, but down side is I will lose future uptick (I don’t lose due to being -ve).
However, I love the way company is being managed, and good balance sheet. I think I would still like to keep it. Good managements are hard to find. For now I am keeping it.
In case, if there is another opportunity that I get interested in, I will most likely sell one third Hawkins.
That’s all for the update. I hope all of you made some good progress. Do you mind sharing the highlights of your 1H 2010?
ABB, ABCIL, Aegis, dividend history, GRAPHITE, Hawkins, HDFC Bank, LNT, NTPC, ONGC, Pidiilite, Power Grid, progress update, Reliance Capital, SVJNL