Note – This is a very old post that has not been updated for the last several years. Do not use any content of this post as investment recommendations.
We recently wrote a post detailing rules for Dead Monk’s Portfolio (DMP). Therein, we mentioned that we plan to divide DMP into different parts i.e., core and satellite(s). This approach will help in addressing requirements of dividend income, capital appreciation & long term stability.
But before delving deeper into DMP, you must understand that it is built around our risk appetites, our understanding of markets & our strengths and more importantly, weaknesses. Since it is born out of our personal vision for ourequity portfolio, DMP will always be like a magic mirror for us. It is there to show how our equity portfolio should look and be like.
And since your risk appetite and investing style may differ from us, we suggest that you use DMP as a snapshot of what stocks we own / plan to own in our long term portfolio. This should not be taken as an investment recommendation from us.
So have a look at DMP below…
To put on record, we are very risk averse (atleast the author is) J. The author still holds a large part of his assets in fixed deposits, mutual funds & cash. At present, equities form only 10% of the overall portfolio. You won’t be wrong in thinking that these guys are running a blog on stock investing and themselves have only 10% of their money in stocks! But low levels of equity exposure are due to our past financial commitments. But slowly moving out of that phase, we now plan to increase our equity exposure. And we won’t be boasting if we were to say that this time, we are far more structured than we have ever been (Boasting 😉 (Read details of portfolio structure in previous post)
After DMP has been applied, this is how author’s investment portfolio would look like:
- 4-5 Dividend Stocks (~ 50% 0f equity portfolio)
- 8-10 Large Caps + High Growth Potential Stocks (~ 30% of equity portfolio)
- 4-5 Cyclical / Risky Bets (~ 20% of equity portfolio)
- 2 mutual funds (ongoing SIPs – Large Cap & Multi Cap)
- 2 planned SIPs to be started in 2012 (Mid & Small Cap) & 2013
- Fixed Deposits
- PPF
Note – Author has a few financial liabilities and has secured them by a couple of term insurance policies.
Author plans to invest whatever he saves every month (& receives as dividends) in a few of these 15-20 stocks.
But how to decide when to invest in these stocks? Should they be bought at current levels?
We will try answering this question in our next post which would be based on Warren Buffett’s quotation – “Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results.”
We will also weigh these stocks on parameters like P/E, P/BV, Dividend Yield, dividend growth, PEG ratio, etc and try to arrive at intrinsic values, graham’s number etc.
We also plan sharing our stock watch-list. This contains stocks which may form part of our portfolio in future.
Please remember that we will never suggest you to blindly go ahead and buy the stocks from the above list (or even include these in your personal watch list). Reasons is simple and explained by dead monk’s disclaimer – No matter how careful we are, as an investor, we will never be able to eliminate the risk of being wrong.
PS – ’15 stocks’ in title refers to all stocks mentioned except cyclical and miscellaneous ones.
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Did you like what you just read?
can u throw some light on NOIDA toll bridge stock??
@2c1c6925883414a3b0fda13d7ac2ce3e:disqus
What we like about Noida Toll Bridge Company is that-
1) It operates in a non-risky business of toll collection.
2) It is done with its capital expenditure i.e. the asset is in place and the only thing left is to collect toll from the users of this asset.
3) Debt outstanding is continously reducing. This is because the toll collected is being used to pay off the debt (& there is no need for further capital expenditure).
4) Since traffic is increasing, revenue collection is bound to increase in future. This in turn would increase the Earnings Per Share.
5) Once the debt is paid off, only way forward for the company is to share the wealth with shareholders, i.e., dividends are bound to increase in future.
6) Another point is that the repair & maintenance costs are not substantial when compared with overall revenues of the company.
These are certain points in favor of NTBCL. As far as valuations are concerned, we think that it is undervalued at current levels. But if one wants to know the degree of undervaluation, then it would require further research on the stock. Hope to do that soon. 🙂
Disclosure: – No positions in the above mentioned company.
thank u so much for ur valuable insights…
Thanks for your effort in creating a informative blog.liked your write up on WB letter and channel9 ipo avoid.
As a fellow investor , i would like to point out that your DMP is missing one important parameter 'economic moat'…a few stocks have it but not in the sense WB puts it. For example look at this three stocks WB owns. Coca cola, visa, master card.
By following parameters like grahams number we can never accomdate these above three companies. We have to go charles mungers way..buy
Great companies rather than fair priced companies. (Is that not what WB teaches us?)The way I see it grahams and charles mungers approach are oceans apart. Only we see it on the same page because of WB.
This is only my opinion. Great work guys. Please continue to post.(looking forward to it).
P.s – Would charles munger recommend Page industries, titan..? Probably graham would strangle my neck 🙂
Thanks a lot for your valuable sharing,right from the beginning till end it was really very informative.I can witness the experience and steps you have taken to accomplish this wonderful work.
Stock investment
http://www.sanasecurities.com
@Raj
We haven't tracked it till now.
waiting eagerly for the new stocks in the portfolio
@Seema
Though most of the stocks may not be new, we will try to come up with the list as soon as possible 🙂
Since it is born out of our personal vision for our
equity portfolio, DMP will always be like a magic mirror for us. It is there to
show how our equity portfolio should look and be like.
I am accumulating L&T, SBI & Hindalco at current levels, for long term of 5-10 years, are these good picks?
L&T and SBI seem to be a good buy for 5-10 years. Hindalco is a cyclical stock. So you can consider exiting it in the next upmove and once again wait to buy it in another downturn.
I am looking to buy Kingfisher Airlines or Gitanjali Gems for long term 2 to 3 years,are these good options?
Why do you want to buy KFA? There are better businesses to invest in.
May i know the details, why i should not go to KFA..
I am looking to hold 50-100 units in small or mid caps.Can you please recommend which stock to buy.
Some businesses are known not to make money when considered for long term investing. And airlines is one of them.
But this does not rule out the possibility that any airline company, KFA or others may not make money in future. In stock markets, anything is possible. It is just that airlines is like a perennial loss making business and I as a personal choice may not like to invest in this business.
Small and mid caps are volatile in nature. So you must understand that a portfolio made solely of such businesses can see massive cuts in downturns and massive upmoves during booms. And by 50-100 units, do I presume that you mean number of shares??
Yes,shares..
can you recommend which stock to buy?
Small and mid caps are risky by nature. So you need to do a lot more due diligence before investing your hard earned money in such companies. In a new post for Dead Monk's Portfolio (http://stableinvestor.com/2013/09/9-stocks-dead-monk-portfolio.html), I have chosen 2 small caps which you can consider. But this would depend a lot on what your expectations are. These stocks are not for the short term and may not turn out to be multi-baggers. So take your call. Any specific reason why you are inclined more towards small caps and not large caps?
The news list is out 🙂
http://stableinvestor.com/2013/09/9-stocks-dead-monk-portfolio.html
Dev, Was there any further analysis done on Noida Toll Bridge. I am following this stock since last 1 year and now I got attracted to this stock as company is now Debt free and Profit is increasing. Lot of free cash flow.ROE is increasing. Div yield is mouth watering 6.5 % and still stock price is not gone up….
The list of shares for long term is amazing ,You made good list for future purpose . Thanks for it…