Portfolio: Exiting Capital Mind Monsoon Portfolio – Returns 20% in 4 Months

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cm-portfolio

The Capital Mind Monsoon Portfolio

The CM Monsoon Portfolio has returned 20.22% in 120 days. We are exiting the complete portfolio with a more than expected returns . Even after short term capital gains tax, you have net return of 16% in four months. 

CM Monsoon portfolio was started as a theme based portfolio, with better monsoons expected for the current year. The portfolio consisted of stocks which had some degree of co relation with monsoon, mainly agro and two wheeler auto companies.

The portfolio consists of 17 stocks, which have an equal weightage of 5.88% and have been allocated Rs 10,000 each (just as a placeholder)

Though the rainfall has not been as much as expected by Indian Met department, and also Q1 results were not that great in terms of numbers, the stocks have been doing well. Just concluding based on Q1 results might be too early, as it doesn’t reflect the complete season. The results might better in the next quarter. But for this portfolio, we look comfortable to exit with the current returns. It was designed to be a medium term portfolio, and we’ve said the basis of it – the monsoon – was not blockbuster, so we head out the door.

CM Monsoon Portfolio vs Nifty

Our intermediate analysis of this portfolio showed a 12% return in the first 75 days. Now it’s a full 20% in 120 days.  (Absolute returns, not annualized)

While the more straight forward Nifty would have given 6.74% absolute returns for the same duration, CM Monsoon has out performed with a heavy margin. Start from the Day 1 portfolio returns have been higher compared to Nifty. The below graph says it all.

cm-monsoon-vs-nifty

The Out Performers and Under Performers:

  • Escorts was the stand out with an 121% returns. It had a long bull run from its breakout at 180 levels and its still moving. GAEL was the runner up with 59% .
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• The  others with above 20% returns are Atul, GNFC, PI Industries. Bajaj, Bayer, Finolex, Hero, Sharda have fared decently with returns in the range of 12-20%.

• Coromandel, Insecticides, Rallis, Swaraj and VST tillers have not that great performance, but still have positive returns.

• Chambal fertilisers and Kaveri Seeds are the only under performers in the portfolio. Kaveri Seeds is down by 16% and Chambal by 9%. You cant have all the winners in a portfolio, their will always be some weaklings.

Note that you will always have a few losers. What matters is the return of the portfolio as a whole. While we will not scream about Escorts (“multibagger”) from the rooftops, we won’t shed too many tears about Kaveri Seeds either. We will however be happy that we got 20% on the total investment in four months. (Please don’t annualize it. It looks wonderful to say 60% a year, but even 20% for a full year is great)

What to do with the money? Here’s the best part. Don’t do anything with it. Until new opportunities come your way don’t invest it. More will come – either as themes from Capital Mind, or as new long term portfolio entries. Till then, a liquid fund is your friend.

cm-monsoon-portfolio-returns-120-days

Note: The buying price is the closing price of 27th May 2016.

For a theme based portfolio like this one, its always difficult to achieve such returns in a short span of 4 months. The monsoons season has still not come to an end, the agro companies have not yet completely reaped the benefits of monsoons, still their is lot of steam left.

But from the base monsoon focus, the portfolio has achieved what it set out to do. We are not sure because of less than expected rainfall and lower Q1 earnings; but a 20% in four months is certainly good enough to exit.

If you’d like to continue to hold, we think another way for you to exit would be to place a stop loss on each stock, a further level below (say 5% to 10%). We would exit Kaveri, VST Tillers, Rallis, Insecticides, and Chambal, book profits in GAEL and Escorts partially. The rest seem okay to hold – either with a stop or after their performance in Q2 (which we will know soon).

So we close this portfolio as it stands. More themes will come your way soon!

Foot Notes

The Monsoon Portfolio was at http://capitalmind.in/capital-mind-premium-monsoon-portfolio/.

The Premium Mometum Portfolio is at http://capitalmind.in/capital-mind-premium-portfolio/.

Our Premium Long Term Portfolio is at http://capitalmind.in/capital-mind-long-term-portfolio/

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Disclaimer

Nothing in this newsletter is financial advice and should not be construed as such. Please do not take trading decisions based solely on the matter above; if you do, it is entirely at your own risk without any liability to Capital Mind. This is educational or informational matter only, and is provided as an opinion.

Disclosure: The authors at Capital Mind have positions in the market and some of them may support or contradict the material given above, or may involve a direction derived from independent analysis.