Premium: CAPM Adds - The "Modi" Stocks
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A few portfolio changes come our way. Some of the new stocks we’ll add is due to the Modi impact - what we think his changes will affect tremendously. But first, an exit.
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We exited KPIT on a Stop Loss. (Mentioned in our last note on Friday) While this is unfortunate, it’s the way stop losses work. (The stock’s down further today)
KPIT slid through its stop and gave us a further 5% loss. We ended up down 15% on the stock.
We will now add a few “Modi” stocks to our portfolio. While we added some of them on Friday, we finished adding them today. They’ve already run away quite a bit!
We’re adding BEML to the portfolio. This is not based on fundamentals, since the company has moved in and out of profitability. It’s the Modi theory of building trains and expanding the rail network (BEML supplies trains). It’s also a defence play, like our earlier purchase of Astra Microwave. (Which is up more than 15% now)
The stock is up 17% though we purchased at a lower price. We’ll note Rs. 520 as the price we obtained the stock at, but we do understand that the stock’s about 5% higher. Technically there’s a nice volume spike and a breakout above a recent high but note that the all-time high is much higher.
The second stock we like is GAIL. Because it broke out of a long time resistance and it’s something that a Modi change will help with, in terms of expanding power supplies. The stock though is on a tear, and up 5% at 433, which is the price we’ll take as our entry price. (Even though we bought a lot lower!)
Finally, there’s a stock we checked in at Rs. 101 today but is locked in the upper circuit. Again, a rail stock called Kalindee Rail. It’s at 112, and you can’t buy any more as of this writing. So if it comes off the circuit we’ll note the price in.
(Note: our actual buy prices are different, mostly lower, than the prices noted.) We’re noting prices as realistic as we can get - frozen approximately at the time this letter was started. But we aren’t doing this to recommend that you buy these stocks - just noting what we are buying.
Here’s a quick look at the portfolio:
Sintex has done particularly well, giving us a 50% return in about two weeks now.
We’re sorry for this flurry of updates on the portfolio. It’s not expected to be this way. But when times are volatile, we act. If we didn’t act on our stop losses, we would have lost more money on those stocks. If we don’t act and buy now, we might lose opportunities. The point about staying nimble is to be ready to act when it’s needed.
Note also that we’re not gloating about the return. Calculated using the XIRR formula we mentioned last week, we have a 135% return on investment. (on money allocated, annualized). But obviously this makes little sense for us to highlight as it’s only been a few months. Let’s give it till July to get a good six months in. But it does feel good!
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.
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