Warren Buffett Quotes

Saturday, September 20, 2014

HINDUSTAN TIN WORKS LTD - POWER PACKED






     

Recently  we discussed two stocks from different verticals in packaging Industry. Polyplex from Polyester film based and Mold Teck Packaging from IML packaging sector . This week let us look into another company from a related sub sector – Metal packaging .Even though plastic packaging is gaining more acceptance ,some products still need metal packaging due to  special characteristic of products to be packed. Chemical reactions, keeping right nutritional / aesthetic values, requirement of extended shelf life ..etc compelling the producers of certain products to prefer metal packaging.This  situation ensures  enough room for metal packaging majors to grow though the chances for new entrants are bleak. At present, metal packaging commanding a 10 % market share of  total consumer packaging market. In this background, let us look into Hindustan Tin Works Ltd which  commanding  20 % of metal packaging market in India. HTWL manufacturing tin/metal cans and closures used in packaging of baby foods, edible oils,paints, ghee, canned food items, fruit pulp,juice,protein powder, shoe polish  etc. Company mastered in Aerosol cans and Beverage Cans . Aerosol cans are mainly used to pack Deodorants, Room Fresheners,Pesticides,paints and industrial products .Beverage cans are used to pack Juices,Flavoured milk and other beverages.Longer shelf life without refrigeration and leakage is an added advantage of beverage cans .Company’s major consumers includes the who is who of FMCG  and Food Industry like GSK consumer, Nestle, Britannia, Del-Monte Foods , Asian Paints,Reebok ..etc.

Company reported a top line of Rs.314 Cr , bottom line of Rs.8.5 Cr and an EPS of Rs.8 in last FY .Current book value of company is over Rs.100.Promoters holding 40 % stake and world’s largest steel trading group Switzerland based Stemcor A G holding another 10 % stake in this company.Now,  management  aggressively tapping emerging  opportunities by developing new products and entering into more overseas markets. The potential of Indian food processing Industry , softening of metal prices,revival of economies and company’s new initiatives are expected to drive the growth momentum forward.This market leading can maker is currently trading with a market cap of less than Rs.70 Cr and a P/E multiple of  8 .Stock is currently trading 30 % discount to its book value of Rs.100 . I believe ,it is one good stock which listed only in BSE and CMP around Rs.70


Link to Company Website HERE 

Disc: It is safe to assume that I have vested interest in HTW


 













   
 

Friday, September 19, 2014

CENTUM ELECTRONICS - UPDATE

  

CENTUM ELECTRONICS  recommended  @ Rs.88 .Yesterday stock hits its 52 week high @Rs.474 .Still recommending to HOLD this stock for long term.

Recommendation Link HERE

Tuesday, September 16, 2014

ALPHAGEO INDIA - UPDATE

This stock recommended @ Rs.38  is currently trading  at its 52 week high @ Rs.526 .Stock already multiplied by 12 times in 11 months . Those with  low risk appetite may sell 25 % of remaining holding and keep the rest .

Link to Recommendation HERE

Saturday, September 13, 2014

THE CONVICTION TO HOLD





Courtesy: Full credit of this wonderful article goes to the original author Mr.Ian Cassel
-------------------------------------------------------------------------------------------------- Extraordinary returns follow extraordinary discipline. Discipline in buying and selling , and maybe the most important one of all, holding. Developing the conviction to hold is something that I’ve learned over time. It didn’t come easy. The basis of this article is to give some insight on how to develop the conviction to hold your winners. It is very tempting to sell along the way, and it’s okay to take a little off the table, but the big money is made by holding.
“It never was my thinking that made the big money for me. It always was my sitting.” — Reminiscences of a Stock Operator
Many of us, myself included, look at stocks that have made big moves and think to ourselves, “If I would have only knew about that company and bought it back then.” But would you really have developed the conviction to hold during the run up? The problem is that to achieve a multi-bagger in the portfolio, you have to hold a multi-bagger. And if you want it to change your life, you need to hold a lot of it.
Don’t bother finding the next multi-bagger if you aren’t going to develop the conviction to hold it.
 Over the last decade, I’ve been lucky enough to be invested in a few stocks that have gone up 5-10-20-30x over a multi-year time horizon.  From my experience, the only way to hold onto a big position after it makes a big move is to know the underlying company better than anyone else. Greed and fear will test your resolve, so you need to learn to keep these emotions in check. You need to believe in your due diligence and form an unwavering conviction.

So how do you develop the conviction to hold?
 
 A lot of due diligence is on the front-end of a buying decision, but it certainly doesn’t stop there. The maintenance due diligence following the buy decision is even more important. For me, I talk to management regularly and keep close watch of all the ancillary forces and trends that are driving the company’s business. My “edge” is knowing my positions better than anyone else. This doesn’t mean I’m going to be right, but the more I know the better.
I think many misperceive high conviction for close-mindedness, ignorance, and arrogance. The conviction I’m talking about is quite the opposite. You need to constantly assess your positions and openly listen to counter arguments. Only then will you have the conviction to hold multi-baggers because you will understand all sides to the story. You also need to develop a thick skin. If you are not ready to be criticized for your convictions than you aren’t ready to make real money.
I believe most investors focus too much on selling strategies and not enough time on knowing what they own. Selling strategies such as, “Sell half after a stock doubles” or “When a position reaches 10% of the portfolio, sell it down to 8%” are meant for lazy investors. These selling metrics-formulas-strategies sound great in academia or when selling an investment strategy to a bunch of lemmings who can’t think for themselves. The truth is if you know what you own at all times, you’ll know when to sell.
In many cases the stocks I’ve owned were better buys after they doubled then when I initially bought them. In many cases when a position became 30% of my portfolio there was a reason for it.  The underlying business was doing really well, or institutions were just starting to nibble on shares, so why would I sell it. Just because a stock doubles, triples, etc, doesn’t mean it should be sold. Stocks should be sold when your maintenance due diligence shows something has changed. If you know the story better than anyone, you’ll likely get clues well before the rest of the market. When a company performs, and the story hasn’t changed, stop trying to change it. Enjoy the ride.
When a stock goes on a multi-year run there will be long periods of time when nothing happens. These are consolidation periods when old shareholders are selling and new investors are buying in
A big part of successful investing is becoming content doing nothing. If you are in great companies, a lot of times your biggest risk is boredom. Warren Buffett’s famous quote, “Our favorite holding period is forever”. If he likes where the business is headed, he’ll continue to hold it and probably buy more. Don’t be active for activity sake. Remember, there are no day traders on the Forbes 400 list. Learn to be content holding and doing nothing.
“Patience is power.
Patience is not an absence of action;
rather it is “timing”
it waits on the right time to act,
for the right principles
and in the right way.”
– Fulton J. Sheen

As a microcap investor who invests in companies with little to no institutional ownership, I want to hold for the institutional rally. When a management continues to execute on a great story, at some point it’s going to attract institutional inflows. You will see this when an illiquid stock all of sudden gets propelled by a sustained period of above average volume. Hello Institutions!
A multi-year run is made up of a bunch of mini-cycles that can last weeks or months. During these times the stock can become undervalued or overvalued. Quite a few professional investors I know like to trade 10-20% of their full position during these swings. For my psyche I’ve found it to be counter productive. If I own a $5 stock and think it might go back to $4 before it goes to $10 in 12 months, I’m fine simply holding it through the mini-cycles.
I hope I’ve helped shed some light on a hard but lucrative topic. Many investors spend all their time trying to find great microcap companies only to sell them after quick paltry gains. If management is executing and the story hasn’t changed, hold on for the real money. Find great companies, develop the conviction to hold them, and it will change your life.
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Friday, September 12, 2014

TASTY BITE EATABLES - BOOK PARTIAL PROFIT

Tasty Bite Eatables recommended @ Rs.165  and again @ Rs.145 ,which is currently trading around Rs.615 .Requesting to book at least partial  profit at current  level .

Recommendation Links HERE and HERE

Thursday, September 11, 2014

SEQUENT SCIENTIFIC LTD - UPDATE

  








This stock earlier recommended as a BUY @ Rs.138 , hits its life time high Yesterday @ Rs.494 . Now company announced the acquisition of Turkey based Provet Veterinary Products through its subsidiary Alivira Animal Health . I believe , it is only a beginning in company's inorganic growth journey . Strongly recommending to HOLD it for long term.

Old recommendation link HERE

Read more news on this acquisition HERE

Wednesday, September 10, 2014

INDAG RUBBER / ACRYSIL INDIA / GRANULES INDIA - UPDATES

INDAG RUBBER  recommended @ Rs.95   hits its life time  high Yesterday  @ Rs.715 . Low risk takers may book partial profit in this stock at this level.
Link to old posting HERE

ACRYSIL INDIA recommended @ Rs.85 ( price adjusted to 1:2 bonus issue post recommendation) hits its life time high Yesterday @ Rs.715 .Low risk takers may book partial profit in this stock at this level.

Link to old posting HERE

GRANULES INDIA - is one stock repeatedly recommended from Rs.79 onwards .Yesterday stock hits its life time high @ Rs.811 .Still recommending to HOLD this stock for long term.

Link to old posting HERE




Sunday, September 7, 2014

ONAM WISHES ...

MAY THIS ONAM FINDS YOU AND YOUR FAMILY IN GOOD HEALTH ...

AND ..

LET YOUR LIFE FLOWS WITH HAPPINESS ...

WISHING A HAPPY ONAM TO ALL MY READERS ....


Saturday, September 6, 2014

GTS-6 ANSWER - AIMCO PESTICIDES



Agrochemical sector is one which re rated sharply in this bull run. Market leaders like United Phosphorous ,Excel Cropcare ..etc hitting new highs every day . The per capita consumption of pesticides in India is just 475 gms per hectare as compared to 11800 gms per hectare in Japan and 3000 gms per hectare in USA.Indian pesticides market is expected to touch $5 billion by 2017.This is offering good growth potential for companies in this sector.In addition to this opportunity in local market,tightening of  pollution related norms in foreign countries increasing export potential too. Aimco Pesticides is relatively an unknown player in this sector.This company jointly owned by Pradeep Dawe and family and one of market leader in this sector- Excel Cropcare.Excel owns more than 25 % stake in this company which they acquired earlier  at a cost of Rs.24.50 per share .

                                                                                               This Mumbai based company is an early entrant in this sector and present in all major  product categories including Insecticides,Herbicides,Fungicides and Plant growth regulators.Company’s R&D facilities are approved by DST and Aimco is also a government recognised export house.Even if it is a pioneer in this sector, its financial performance was poor till recently. Company’s sizable debt was a big issue , but  recently it entered into a one time settlement with its bankers and retired substantial portion of  its debt . Now its debt is very negligible.Company also succeeded in registering few new products in overseas markets. Company currently earning 25-30 % income from export markets and it is expected to increase further.Company also planning to introduce few more new molecules.

                                  
  

 
 
 
Management seems paying renewed interest to revive this company in recent times. As a result , company reported substantial improvement in latest June quarter. Company reported profit after a long gap with  a top line of Rs.47 Cr and a net profit of Rs.1.5 Cr in this quarter.It can be considered only as an early  indication of changing trend and one should wait and watch the continuity of the same going forward.But promoters increasing confidence is a factor to read along with this improvement. For the past many months they are aggressively hiking stake through open market purchases. ( Check promoter purchase details HERE)


Aimco’s stock price gained in recent months due to various factors like  improving financials ,over all sector re-rating and aggressive promoter buying .Promoters bought shares up to Rs.35 level.When we look into a stock which appreciated substantially in recent times, it is not prudent to take similar strategy for investor’s with different risk level. Investor’s with low to average risk level may wait for a correction of 20 % for a fresh entry (though I am not sure whether it will really happen  when  promoters are  purchasing aggressively ) and high risk investor’s can take some exposure even at current level.Stock trading only in BSE .

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