Being on my own

I finally left IBM and started my venture in Financial Planning Services. Its been about 3 months and of course it feels great. I am much relaxed now, away from day to day tensions of the job. However, far from saying it's all great here :)

I am working hard...probably even harder than the job. Sometimes I end up working for 15 straight hours on desk but I am enjoying it. Our website (Click here) is live, offerings are developed and revenue model has kicked in. We have signed up 30 Customers for our Financial Planning Services so far. I am seeing a decent response for our service though a lot yet needs to be done. We have now hired freelance writers for our website and we also have a Financial Planner working for us. Expanding the scope of services would be a key factor in the months to come.

A quick summary of lessons learned as an Entrepreneur, so far:

1. Whatever I thought would be my Unique Selling Proposition, someone is already doing it :(  So learning here is to move faster, much faster
2. Web has amazing amount of free goodies available for small businesses. You can get free stuff right from Domain to Site Hosting to Visiting Cards to Email Campaign Software. 
3. Try and balance financial commitments. We can't spend too much too soon. That said, we also can't spend too less, too late. There is no easy answer here. 
4. Since we learn as we go, try and take small steps. A good example - I ended up ordering 1500 Visiting Cards in two orders but most of them would not be used now. Yes, we have changed the Company Name, Tag Line, Card Description, Logo and now very soon the address :)
5. Talking helps for Customer Acquisition. For me, nothing else is working right now :)
6. I am glad we invested in procuring images, software and decent hardware. We could save money but then going on the wrong side of the law does not help in the long run. 

Regards, Rohit

Getting CFP Certification - My Approach & Tips

I recently cleared CERTIFIED FINANCIAL PLANNER Certification. Below explains my approach while preparing for the Certification:

I took Challenge Status Route & attended IMS Pro School Classes in Mumbai over weekends. I studied for about 2 months over weekends before giving the exam. I thoroughly completed Case no. 14 to 24 given on Pro School Website. I Identified the gaps where I was not scoring & prepared comprehensive notes that came very handy. 

I reviewed all Theory Questions given on Pro School Website. I could only attempt one case in real time 4 hour target. I registered 2 Weeks before Exam & took 4 days leave before Exam. 99% Questions were covered in IMS Pro School Syllabus. I thought I did well, but actually did not. But I passed :)

I fell short of time in the Exam. This was very surprising. I was prepared to use Open Office. However, Mumbai Center has Excel :)  

Best of Luck

 

Healthy Insurance

Sometime before I came across below links. The article has a very good analysis of decent health plans available with Nationalized Banks. I am aware that servicing is bit of a challenge but I have experienced similar problems with other channels as well. Moreover, the Price is almost 60% less than what you normally get in the market. Yes, I plan to enroll all of my family into one of these plans.

The Business Today  article has a quick summary of important aspects that one needs to check for a health policy.

Mediclaim Policy by Nationalized Banks
Business Today


Regards, Rohit

Finding a Value

Hello. I came across an interesting post on Nesco at Rohit Chauhan's blog, here. From there, I found few more analysis. You can find Ninad Kunder's analysis here, Neeraj Marathe's analysis here & Sanjay Bakshi's research report here. Sanjay's report is about 2 years old.

You will find a very strong case for investment. I am from Mumbai and have worked in Nesco premises earlier. Even today, I stay in Goregaon in Mumbai and I can understand the investment rationale. This is a good case of bargain fishing. Rohit, Ninad & Neeraj have shown an excellent comparison of Nesco's intrinsic valuation estimates Vs. current market value. I am aware that Mumbai Real Estate is slowing down though including the Exhibition business, Nesco sounds a good proposition.

Regards, Rohit

Disclosure. As of now, we are not invested in Nesco. I may or may not invest sometime in the near future.

Up or Down

We continue to stay invested. There have been few sell side trades though generally we have been investing.  As a strategy, we have invested in high quality large cap stocks. Investments in last 4 weeks were well timed. Currently the portfolio is showing a decent gain though the top 7 scripts are accounting for all of the gain:)

There are many mid-caps looking attractive at the current levels though I would stick only to large caps at the moment. Hard to say the 2012 outlook for Equity Markets though I stay bullish for a 3 year horizon. We have also started regular investments in Gold EFT from last few months. Recent norms introduced by SEBI for listing day IPO trading should help in the long turn.

www.rohitshahsworld.com is registered now though site is under development. I would like this site to focus on Financial Planning resources. I now have a good collection of all books related to Financial Planning. I would like a list of such books to be published on the site. It will take a while to get the site fully up & running though.

Long hours continue at work place. Not much chance to blog or read books. Hoping that I will get regular on reading front, sometime soon now.

Regards, Rohit

Its been a while

We have liquidated all our Mutual Funds holding except for Gold ETF. I am seeing lot of opportunities from a 3-5 years perspective so I am getting very aggressive on direct equity now. I still continue with my dilemma of "Still Investing" when I see need of substantial funds next year :)

I continue my weekend classes for financial planning course. Intend to give exam in about two months. I am learning interesting concepts especially on Retirement & Goal based planning. There are many excel formulas I already knew though making good use of them now.

I have decided not to make any specific stock or mutual fund recommendation considering my current engagement at work place. I am updating my portfolio in the "Disclosure" tab. Banking & Finance  continues to dominate with 55%, Technology at 15% & metals at about 9%.

This Diwali, I wished but could not buy any Gadget. I was very close to buying an IPad 2 however, keep hearing rumors about IPad 3 launch. I know, this way, I may end up waiting for IPad 5 and may never actually buy but just human nature, after all :)

Love for buying the books continued though. I went all over the place and bought some 44 books from India Plaza. Most of the books are in Financial Planning, Money or Investment area.


Regards, Rohit

Market Capitalization

I am wondering if there is any authentic source to check the Market Capitalization category of the stocks. A little bit of research on Google shows that there are many thoughts.

1. Large Cap is a Stock with market capitalization > Rs.20,000 Crores
2. Mid Cap is a stock with market capitalization > Rs.5,000 Crores but < Rs.20,000 Crores
3. Small Cap is a stock with market capitalization < Rs.5,000 Crores

Two links I checked are below.  I guess I need to do lot more research.

Fundsupermart Article

Jagoinvestor Forum

Regards, Rohit

A Dream Portal for Stock Filtering

At some point in time, I would like to build a very interactive website that helps to filter stocks just the ways you like. I have not been reading much recently, but what I have noticed so far is that we don't have good sites that help to select stocks as per custom filters. So here is my wish list:  

1. Trend Graph on PE, EPS, ROE for a given period. What we have today is only Market Price.
2. A filter to identify stocks with a given PE, Market capitalization, ROE, Group classification etc. on a TTM (Trailing Twelve Month) basis. Money control & BSE have decent filters but with limitations. Money Control doesn't classify say Group A stocks & also gives only Top 100. BSE doesn't capture TTM EPS.
3. A filter to identify say A Group Stocks which are close to their 52 Week low & PE < 10
4. A filter to identify say A Group stocks which have fallen > 25% but have 5 year Average ROE > 20 
5. A Portfolio Tracker that gives multiple views especially on valuation. Provides a relative Outperformance within the Portfolio. Most of the Portfolio Trackers we currently have only provide 52 W High & Low, Current & Yesterday's Market Price, % Change etc.
6. A Portfolio Tracker that has a forecasting ability. Allows you to define EPS Growth, assumes historical trend and forecasts a price
7. A filter that allows you to identify high beta stocks with low valuations. Something that you can expect to sharply rebound when market rises back.
8. A Portfolio Tracker that allows you a view of say F&O prices next to CMP.
9. A Portfolio Tracker that gives you multiple views say by D-Mat Account or By Owner.
10. Allows you to build the average price view of say 'Reliance sold in last 6 months'.
11. Explains the underlying business of the Stock. As short as 'Elevator Speech' to as long as a Thesis.
12. A site that has an excellent interactive interface that builds indicators that the investor would like to analyze and then quickly pulls the data. This is just not relevant but here is a wild comparison. If you look at Zoomin website, you will notice the number of options you have to to print your photos on things like normal album, stationery, tshirt, mugs, calendar and so on. What is remarkable is the way they have made it a user friendly & a flexible site. Something like this is what I would like to have, some day.

Regards, Rohit

Some more Books

Monday blues attacked me today and decided to stay back at home. After some rest, went to nearby Crossword store & bought below books:

1. I have a dram by Rashmi Bansal
2. 108 Mantras for Financial Success
3. Who says Elephants can't Dance by Louis Gerstner, Jr.
4. Unusal people do things differently by T  G C Prasad
5. Recipes for Success - The food & vision of India's Achievers by Aarti Kochhar

Regards, Rohit

Here is a link on Money Control showing views of Basant Maheshwari (The Equity Desk) for Page Industries & Hawkins Cooker. I found the views to be interesting especially on Page Industries. I have been holding back from sometime to invest in Page Industries thinking its bit expensive but here is a perspective.

We have invested in L&T Finance IPO though looking at market undertone, I suspect there may not be any listing gain. The quality of IPO looks very good so let's wait.

Recent Outlook Money edition (July 13, 2011) has a good article on zero debt stocks to buy. Argument is that in the rising interest scenario, the stocks with zero debt and good track record are good bets. The below stocks are covered. I would skip FAG bearings and SKF India as I don't think I understand the business. Gujarat Gas Co. is in the business of providing piped Natural Gas & Compact Natural Gas in Gujarat. CRISIL is of course a relatively easy business model to understand. Castrol India is into Automative & Industrial lubricants. I am not sure if I understand Castrol's business. I am not looking for Portfolio expansion so skipping these stocks for now though would have ideally liked to research on Castrol India and CRISIL.

1. Castrol India
2. CRISIL
3. FAG Bearings
4. Gujarat Gas Co.
5. SKF India

I continue my little trades. Have recently sold all quantity of Power Finance, Innoventive Industries, Eros International, MOIL, Muthoot, Punjab & Sindh Bank, Shipping Corp. & Tata Steel. Also sold a little bit of LIC Housing Finance & Yes Bank. Hope to buy some of these back at lower levels.

Regards, Rohit

Mutual Fund Portfolio

Took a quick stock of Mutual Funds in my portfolio. No major surprises. I am redeeming 40%  of my holding in Reliance Growth since I can see opportunities in Direct Equity and can't invest more funds. On the other hand, Reliance Growth is not doing so well and also its the highest value fund in my portfolio.



Value Research Query

Regards, Rohit

Useful Links

I came across few interesting links. Stock Scanner site is showing a technical error at the moment but seems very useful. The Equity Master Research link allows to research a stock with a detailed comparison to Industry peers. Investor First site is from a trust established by SEBI and provides information on Investments and Financial Planning. Also came across BSE & NSE Links with research reports on few stocks.

Interesting Links

BSE Stock Scanner

Equity Master Research

Investor First

NSE Equity Research Reports

BSE Equity Research Reports

Reference Blog - Good Links

Custom Screener

Money Control - Market Stats

Non Moving Capital

I am noticing that IPO Investments in Punjab & Sindh Bank, Shipping Corporation & MOIL are not moving anywhere. In last two weeks, Stocks have decently appreciated, in general. However, these stay more or less stay the same. We would now book losses (P&S 12%, SCI 21% & MOIL 20%) and shift the capital into Power Finance or some other stock that can move faster.

As mentioned earlier, I reinvested in Power Finance & Innoventive Trades at lower levels. These Trades are showing some profit and I am thinking to en-cash as my sense is that market undertone is still bearish.

Regards, Rohit

In & Out

Some of my IPO investments are coming in & out. Paid a very heavy price for wrong decision on Innoventive Industries :( Similarly, Muthoot Finance and Power Finance (FPO) turned out to be poor listing as well. It seems to me that Sell decisions are turning out to be more crucial at this stage than the buy decisions. What I am doing right now is to leverage the bearish undertone and use sell positions.

As an example, I had liquidated all of Innoventive Industries at about 97 on the listing day (against IPO Price of 117). Few days later I managed to buy them at 86 and again sold them at about 95. The stock is down to 91 right now.

Similarly, I managed to liquidate Muthoot Finance @ 183, bought back at 160. Missed selling them when it reached 185 and its now back to 160. Nevermind :)

Similar story with Power Finance. Sold the FPO quantity at about 194 average against 193 FPO Price. Now the stock is down to 180. I am thinking to buy back tomorrow subject to market mood. The valuations are extremely attractive too right now...at about 8 PE.

If I could afford to invest more in Stock Market, I would buy more of below stocks with investment horizon of at least 3 years. The most part of my buy recommendation is attractive valuation and solid growth foundation that already exists.

• Power Finance
• Yes Bank
• Shriram Transport
• Piramal Health
• Tata Steel
• Aditya Birla Chemicals

Yes Bank has announced the Roadmap for 2015. They would want to get to 750 Branches from 250 today. They would like to grow to 3000 ATMs, Rs. 125000 Cr. Deposits and Rs. 100,000 Cr Loan base. This is very impressive. I am tracking Yes Bank since 2004 and can say that they have proved their credibility. I do see a bit of delay in management guidance and actual execution as an example Rana Kapoor had declared the target of 225 Branches by March 2010. This actually happened somewhere end of 2010 / early 2011. However, my sense is that this is still an incredible growth with a high management pedigree and a very good quality of loan book.

I feel there is a bearish undertone in the market and in the short term lower levels could be seen. I do not watch markets very closely now a days and given my engagements at work place, I have slowed down on most of the reading as well. My sense is that in the Bulls Vs. Bear fight, at the moment Bears are having an upper hand. I have a very strong conviction that any one investing in the markets right now will be very handsomely rewarded in 3-5 years time.

Regards, Rohit

Investment Updates

I have invested in Innoventive Industries IPO on the last day. This is not usual for me as I don't find valuations attractive and quality of IPO is not gret. However, I am bit tired of watching my Capital earning sub-optimal returns. Let us see if we are lucky to make some money here. The other investment in Muthoot should certainly bring in some little profit.

I am taking a hard look at IPO investments of MOIL and Punjab and Sindh Bank. I would like to close these trade now, albeit a bit negative. Once again, reminds me to stay with the stated approach of liquidating immediately on listing. Both were kind of exception as they did not meet my target. Nevertheless...

I continue to be very busy with work, including weekend. So I am running out of bandwidth to catch up with my investment reading.

Regards, Rohit

Muthoot Finance IPO

We are applying for this IPO. My sense is that valuation are slightly expensive but looking at the potential of gold financing business, which is largely in unorganized sector at the moment, this has a very large potential to grow. We are also invested in Manappuram from last few months.

Regards, Rohit

Warren Buffett Cover Story in Outlook Profit

April 15th edition of Outlook April has a cover story on Warren Buffett. Raamdeo Agarwal and Abhishek Dalmia share their thoughts on Warren Buffett and his investing style. Here are key thoughts.

Five Lessons from Buffett - Raamdeo Agarwal

1. Price is not value. A good company may not necessarily be a great stock at every point.
2. Get the business right. A bad business always outlives good management.
3. Get the management right. Judge not only competency but also intent, and if in doubt, pass.
4. High quality patience. Buy as if your holding period is forever, it could well be.
5. Investing is not a perfect science. There will always be mistakes but stand by your core principles.

 Raamdeo Agarwal also strongly recommends reading Warren Buffett's 2007 Letter to Berkshire Shareholders. Here is the link.

Five Lessons from Buffett - Abhishek Dalmia

1. Find your edge, hone it. Unless  you know something better than the others, the dots won't connect.
2. Don't torture numbers. Spreadsheets have no qualitative inputs, so squeeze them, but not so hard.
3. Check, double check, recheck. You are better off, with managements that have more than a plan.
4. Margin of Safety. If you buy anything cheap enough, it is almost hard to lose money.
5. Think things through. Run through your investment checklist again and again. 

 Reading the entire article is surely a good idea. Lot of good thoughts.

Regards, Rohit

Credits : Outlook Profit, April 15, 2011 Edition