9 Stocks – Dead Monk Portfolio

After procrastinating for months, I am finally sharing names of companies which are part of Dead Monk’s Portfolio (DMP).

But before that, here is a gentle reminder of what to expect from this portfolio.

In previous post discussing (or rather rethinking) Portfolio Structure & Composition, I mentioned that for DMP, I would stick with Core Satellite structure and a maximum of 15 stocks in the portfolio. You can read more about the reasoning here.
core satellite portfolio of stocks
Structure of Dead Monk’s Portfolio
In a follow-up post deliberating the need to find more dividend paying companies & stocks from other sectors, I mentioned that most of the stock in existing DMP pay decent dividends. But just to be on a safer side, I would also keep an eye for new dividend candidates, in case I decide to kick out some of the existing stocks. There is good bad news and bad news on this front. I have removed one dividend payer – Graphite India from the core. And next bad news is that I have not found a suitable replacement for this company. 🙁 Hopefully, I would find it soon enough.

Another point to note here is that no. of stocks in DMP has been reduced from 15 to 9. This is because of one above mentioned removal, as well few more removals from satellite part of the portfolio. I have also not named specific companies in Misc (Satellite) part of the portfolio. This part deals specifically with short term and speculative bets and is more dynamic (changing) than rest of the portfolio.

Out of the 9 stocks, 7 were part of original portfolio too. Two new entrants are marked with a ‘*’.

So here are the 9 stocks –

ONGC

Clariant Chemicals

Balmer Lawrie & Co.

Tata Investment Corporation

Axis Bank

ITC *

Yes Bank

IDFC *

Cairn India
9 stocks of portfolio dead monk
9 Stocks in Dead Monk’s Portfolio
I would have personally loved to add more stocks in this list to achieve higher diversification. For record, only 4 sectors namely Energy, Chemicals, Financials & FMCG are part of this portfolio. You can say that this kind of diversification may not be sufficient. But this portfolio is in line with my own risk appetite and understanding of certain sectors. I would prefer to stick with only a few companies and business which I understand rather than venturing out dangerously in areas I don’t understand. I may be missing out on potential multibaggers here. But that is a price which I am ready to pay to have a stable, ever growing portfolio of stocks which I am ready to hold for decades and not just years.

Note – You might say that this portfolio is not stable at all. It has been reworked in less than 2 years itself. Correct. It’s true that I have taken the liberty to change (reduce) the no. of stocks in the portfolio. But this is because I myself am learning newer things about myself and my personal investment psychology. I am arranging a long term portfolio around my personality rather than it being the other way round. Anyways, most of these 9 stocks were already a part of the original portfolio. So change is there, but it’s not an earth shattering one. 🙂

I have already covered about most of these companies in detail as provided in a list below.


One particular business which has seen some drastic changes in last few months is Clariant Chemicals. I am personally not very sure as to how to take a call on this one. But because of management’s proven track record and respectable dividend policy, I have decided to stick with the company for time being. But you can take a call yourself by reading my thoughts on Clariant Chemicals and also weighing the consequences of some recent developments (link).

As far as ITC is concerned, please be aware that this is a business which I like, but maybe not at current valuations. So one can wait for valuations to come down. Or if one is investing for years to come, a steady and disciplined buying of ITC’s share can be considered.

I would leave you with these thoughts and this ‘link-heavy’ post. Rest assured that I have put most of my money where my mouth is. 😉 Do share your views about these nine companies and also share your list of stocks which you would be buying for next few decades.

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TATA Investments available at 50%+ discount to its NAV!! Should you buy?

Tata Investment Corporation Ltd (TICL) is an interesting company. I have personally liked this company for its simplicity and its dividend payouts. And having a Tata brand attached to it does not hurt anyone. 🙂 This company can be one of those so-called safe businesses, when bought at a good price.

tata investment corporation logo

The business in itself is pretty straight forward. It invests primarily in equity shares, just like any mutual fund. But it does not collect money from investors. It uses its own money for investing.

The Company’s investment philosophy is to “invest predominantly on a long-term basis in (industrial) companies that are well-managed and offer potential for high dividend yield as well as high growth and whose stock may be trading at a discount to its underlying intrinsic value.

The underlined text in company’s investment philosophy is what attracts me to this business. I have always been an advocate of companies which pay decent dividends, even though it may mean that these companies lack better investment opportunities. This is because when investing for decades and not just years, it’s wiser to stick with stable, rock solid dividend paying companies for core portfolio. This helps in generating an ever increasing stream of dividends and provides additional money to fund acquisition of growth stocks.

Now, if we go by the book value of TICL, it has shown a decent (but not continuously increasing) trend. It has climbed up from Rs 150 in 2003 to above Rs 350 in 2013.

tata investment corporation book value per share
TICL Book Value Per Share (2003-2013)

In the meantime, and as already mentioned, the company has been generous to its investors and has doled our liberal dividends year after year. The graph below shows the stability in dividends paid by the company.

tata investment corporation dividend payout
TICL Dividends (2007-2013)

And with recent market correction, the stock is trading at a mouth watering dividend yield of more than 4.5%. For me, this is a very exciting number. But same may not be the case with you. This may not seem like a very big number to you. But assuming you are a long term investor who can hold the stock for many years, the dividends under normal circumstances would continue to increase. This in turn would increase the yearly yield on cost basis. So even if we just look at this stock from dividend income perspective alone, the stock deserves to be accumulated at current levels.

Another interesting way to check stock valuation for this company is to compare the stock NAV with its current market price. This NAV as explained on company’s site, is a measure of market value of all investments made by the company. This is similar to a mutual fund’s NAV. If you see the graph below, it’s clear that market price has always traded at a discount to company’s quarterly disclosed NAV. This is not a strange phenomenon as holding companies (like TICL) tend to trade at a discount to the market value of their investments.

tata investments stock price discount NAV
Stock Price has always been less than company’s (investment) NAVs

But important point to note is given in the next graph. The red straight line is the average discount at which the stock has traded to its NAV. This is close to 38%. But with recent fall in share prices, the discount has widened to around 55%. 

tata investments stock price discount with NAV percentage
Discount to company’s NAV has risen in recent times (Check Right part of chart)

Now, TCIL has traded at such steep discounts only in the crisis of early 2009. Such deep discount to NAV demands that this business be given a serious thought when buying stocks for long term portfolio. 

Risk – Before you go ahead and buy this stock, please do remember that just like stock price, this NAV too is market dependent and fluctuates depending on market value of investments made by the company. For a detailed description of company’s investments, please go through the latest Annual Report here. For a quick glance of company’s financials, click here.


Disclosure – Long term positions in TICL.

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