Investment = RJ

RJ
Qualities critical to Investing
• Be an optimist.
• Be realistic. Expect a realistic return.
• Think independently & not like crowd.
• Don’t have herd mentality.
• Be patient & have conviction.
• Assess risk & don’t forget the black swan.
• Have an open mind. While investing pursue no religion. Pursue opportunity wherever visible.
• History is a guide, but in a dynamic world- new horizons, new prices , new realities , -Times change every day.
• Think of the broad parameters & the larger picture.No analysis-paralysis pl. Robust performance , future prospects do not make necessarily good profitable investing.
• Most unpopular ideas may be most profitable.
• React to value dimensions & long term history rather than to recent experiences.
• Don’t be afraid to make mistakes.Only make one which you can afford so that you can live to make another.
Investing the RJ way

1) Efficient asset allocation.:What % of assets to each class.
Depends upon growth prospects , risk profile ,valuations
3 steps: Selecting asset classes , deciding weightage of each asset class,
Level of leverage.

2) Correct stock selection. External opportunity , Demand or potential demand for product/services.
Strong competitive ability , Technology , Mktg skills , Locational advantages, network size ,
Capital availability , & size , skilled people.
Scalability : Small caps that can grow in large caps
Challenges of scalability include capital vision,risk appetite , hunger for success , ability to
change , meritocracy , people , Mkt size , Processes & systems ,
People : Ability , integrity , sharing
Price-value divergence :M Imp criterion in Investment stress test. 2 most difficult adjectives, Beauty in woman & value of stock. Both lie in the eyes of beholder & are transitory in nature .
EPS predicting is science & an art.
Predicting P/Er is more of an art. Practiced by experience. Like cooking & sex it cannot be taught.
When I look at entry price , I look for margins of safety & price in a scenario where assumptions go wrong. Crux of choosing a good stock : Identifying factors that will drive Co’s future eco performance,
Assessing current valuations , & estimating its effect on profitability.



3) Exit horizon. Independent decision , not driven by profit or loss.If I have better competitive opportunities
If EPS or expectations about EPS are coupled with unreasonable P/E Ratios. Since value & valuation are both transitory & have no definite benchmarks. I try to sell not on top , but aspire to capture overshooting Beyond fair value..


4)Disciplined leveraging – Mos t investors never take Debt , never leverage. I believe in magic of of emotionless & disciplined leveraging. Started with little capital & trading profits was only source. Leve. Allowed me to magnify investments & earn meaningful returns. I leveraged only to the extent of servicing my debt. Dividends were enough to pay interest.
Leve could be a value-conscious decision. Liquidity is key to leveraging. Hlold liquid shares 5 times greater than amt taken for leveraging. , so unwinding can be done any time. Agility & speed are imp but these are double edged swords.



5)Constant reviews. We invest in dynamic & uncertain world.
Also we don’t take invest decisions at one time.. we do it in phases.

PORTFOLIO:
Agro tech foods 15
Alphageo 1
Aptech 19
Autoline industries 7
BEML 8
BHUSHAN STEEL 24
BILCARE 81
CRISIL 128
DWARIKESH SUGAR IND. 2
GARWARE WALL ROPES 2
GEOJIT FIN SERVICES 42
GEOMETRIC 6
HIND OIL EXPL 35
INDAGE VINTNERS 5
INFOMEDIA 18 10
ION EXCHANGE 5
JB CHEM 4
KAJARIA CERAMICS 4
KARUR VYSYA BANK 52
LUPIN 163MID-DAY 3
NAGARJUNA CONST 52
PANTALOON RETAIL 38
PRAJ IND 84
PRIME FOCUS 9
PROVOGUE 8
PUNJ LLOYD 51
RALLIS 7
RISHI LASER 1
TITAN IND 327
VADILAL1
VICEROY HOTELS 11
ZEN TECH 4
ZENOTECH LAB 34 TOTAL 1,245 CR.
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TOP 20 STOCKS – BUSINESS TODAY
AVENTIS PHARMA
MNC Pharma-drugs-dia & cardio vascular
Zero debt & a negligible capex will generate cash-piles
AXIS-
Robust business model
Advances growing despite lackluster credit offtake
BHARAT ELEC Defence sector
Consistent increase in turnover & net profit. Big beneficiary of increased defence expenditure

BHARTI AIRTEL Telecom
Market leader in mobile telephony
Scaling up operations in telemedia business
BHEL-Power Plant
Strong balance sheet, cash pile, big order book ,
ENGINEERS INDIA-Engg
Leading Design & engg , order book,debt-free
GMDC-Lignite Mining
Lig volumes to grow 13 %
HCL TECH IT
Wide portfolio,R & D, Enterprise, BPO & Infra Mgt
Strong presence in High growth , high end , low competition business
HDFC-Hsg Fin
Largely untapped market, asset quality improved
HERO HONDA-AUTO
Mkt leader, debt free.
IDFC-Infra lending
Sound management ,sound mgt
INFOSYS- IT
Best corp gov practice, Offshoring Increase
IOC-Oil & Gas Crude prices fall.
Profitability protected because of pipeline

MAHA SEAMLESS – Pipe Mfg
Orders , Lucrative Intl Orders, Low debt
MARUTI SUZUKI-Auto
Vols to grow, Expansion capacity & R & D
NESTLE –FMCG –Brand Esta , Tier 2 & 3
RALLIS INDIA – Agro chemicals
Thrust on exports ,
SBI- no cash crunch
UBI-High op. efficiency, good asset quality