TIPBlog Portfolio Update: 1H 2010
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.
TIPBlog Portfolio Update: 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
Hi TIP,
congrats on your progress…
Few doubts…
1.What is meant by Dividend Port OC/Dividend Port R(I guess dividend re-invested)/Dividend port BI(Bought in?)
2. I guess SJVNL havnt declared any dividend so far, how you calculated the %dividend income?
Hello Y@M,
(1) OC stands for original capital from my salary, R stands for re-investment. BI stands for blog income. This is for differentiating where the capital came from, so that I can track contribution. It does not necessarily mean there is any difference in how I invest. Philosophy remains same. I still look at my capital as “my capital”, does not matter where it came from.
(2) SJVNL has been paying dividends for long, but only to its existing owner, which is government. I back calculated for 2009 which comes about rs 0.80.
Best Wishes,
Have you done any analysis on Engineers India ? Is this a good stock for long term value investing? my analysis based on past 5 years balance sheet and PL account shows it is a good on ROC and debt/equity – but may be overpriced by about 60 bucks at CMP of 320 – I’d like to know ur take on this stock before initiating on this one.
BTW, I’ve been reading ur posts for a few days and I like it..very useful.
Hello Arun,
Haven’t look at Engineers India. Do not plan to look into it in near future. I will publish if and when I get interested and read about it.
Best Wishes,
Gov. owned Tamilnadu newsprint has an excellent track record in dividend. worth to watch.
@TIP Guy, I have following for last 3 or 4 months now and i think have fully read almost all post one at a time. I salute your focus and and not getting carried away by all the crap that goes around.
the articles and topics have a very consistent theme. you have also not strayed into “jack of all”. i also like that you have kept your blog very clean with no junk comments or junk articles.
One think I like about your blog: it does not claim or show or pretend to be expert. like the humulity in your post. PLEASE KEEP IT THAT WAY.
Thank you.
PS: Would like to know you in person!
Hello Rutwik,
Thanks. Glad to know you liked it. Well, I like quality and not quantity. I surely hope to continue doing it, and hopefully keep readers like you happy.
Best Wishes,
Hi Tip,
I like the level of quantitative analysis you bring to your stock picking. Good Show!!
However i had a few questions on Hawkins(relating to growth):-
1)Since this is a play on the middle class consumption, as time moves on more and more people would prefer branded cookware and hence tend to buy Hawkins/TTK which should mean higher growth
2) Introduction of GST should mean level playing field for organized/unorganized players. Hence unorganized players may not be very strong on the pricing front
3)While TTK Prestige is also in the same business, it does not show the same levels of ROEs as Hawkins does showing superior financial performance on the part of Hawkins
To me the Hawkins story seems to be confined to a 2 way battle between Hawkins and TTK. Would like to know your views on the same?
Hello Hari,
Thanks for your thoughts. All this is good and I would tend to agree on the qualitative items that you bring up. But I do not necessarily agree on the conclusion you are “probably deriving”.
To me, the right way to look at all three points is; (1) what does it mean in numbers, agreed that it will grow, but by how much; (2) what these numbers look in the context of past growth; and (3) if the numbers are great, can it sustain? how long?.
Qualitative I agree with three points. Quantitatively, my growth expectations are conservative which are less than recent past.
Let me know if you have any numbers to share.
Best Wishes,
Hello Tipguy,
I have been following your blog and rode the boat with your picks. I must say thes have been impressive and your posts were timed well. These have given me returs in excess on 50% since October last year…
I must also confess that I have doubled my portfolio following your posts and my trading techniques of technical analyis with fundamentally good companies. Have you ventured into technical trading?
Hello STG,
Happy to know you could benefit by reading my blog.
No, I have not ventured into trading of any kind. And I do not have any desire in future also. It is not my cup of tea.
Best Wishes,
I am glad to see that I am not the only one who enjoys your blog.
You are right about whether we should worry about the Euro crisis or not. I have a feeling we will now experience a regular occurrence of these crisis around the world from time to time as each “individual” economy adjust for their expansion.
America came first, now the Euro, where next? That’s my question. In the end, I think it really pays to keep the long term goals in sight AND a hefty cash reserve for buying opportunities when a crisis hit somewhere.
I will have to review my 1st half of 2010 and see if I can post an article worthy of measuring up to yours here.
Keep up the great work, TIP.
Really nice blog and great information.
hi…
i am keeping watch on share price of asian paints…..as i want to buy this stock…..having solid return on investment as well as good dividend history..but when i start follwoing ..price moving up and….currently P/E ratio is around 28 which i feel very costly…what is your openion….is it good buy considering growth stock…..and ignoring high P/E ratio?
Hello Chetan,
You have been a long time reader of my blog, and hence you should be able to guess my answer
I do not buy any shares for any company at premium. In some cases, may be upto 10% premium or so. But beyond that no way. I like Asian paints, it is great company to have in one’s portfolio. Everybody knows it and that makes it expensive. Hype is not what gives you return, it only gives you a losses. No matter how good a company is.
You have to decide your comfort level or risk you are willing to take. I cannot suggest what you should do. But I can tell you that even though I like the company, it is very expensive and outside my comfort zone for premium price.
Best Wishes,
congratulations for continue to maintain your goal.
DS and Erica,
Thanks
congratulations my friend. you have excellent discipline and great patience.
hello,i want to know your investment advise regarding following stocks
1.sasken 2.core projects 3.opto circuits 4finolex cables 5.everonn 6.zylog 7.aftek 8,himmatsingka 9.welspun india 10.sona koyo steerings
thanks
Hi tip guy,
would you include an update on NIFTYBeeS? I read somewhere you did make a starter position? my interest is to know what % does it occupy in your portfolio.
Thanks in advance.
RB