My IPO Investments

Humm.. It's been copule of years that I am investing heavily in IPO. So here is my track record:

When I reflect back, here is what helped me:

1. I am a leaveraged investor. So keeping in mind the 9% pa cost of funds, in most cases I have opted to sell on listing or in next one week.
2. Since I rarely sell my long term holdings, IPO 'Investment' approach helps as I am booking profit, somewhere. Also, in most cases, it's difficult to gauge the long term potential of a script during IPO. For long term investments, I like to observe a script for few quarters and get comfortable with business, performance, management etc. and if positive, keep buying as I go along in an increasing manner.
3. Most of the good IPO scripts are bought by leading MF Schemes anyway and I am invested in most of them.
4. Whenever sentiments have changed or I have made mistake in 'investing', I have choosen immediately to book losses rather than emotionally holding on for 'recovery'. Deccan Aviation, Gangotri Textiles, Manaksia are good examples. This has helped to 'stop loss' except in case of Deccan Aviation. Also, please excuse me for Reliance Power. Just like most of the retail investor, I have now become a 'long term investor' as long as Reliance Power is concerned.

What did not help so much:

1. Most of times, I have blindly sold without recognizing even the short term potential of the stock. MIC Electronics, Allied Digital are examples. Since intention is to maximize the profits, I think I need to have a variable strategy of booking profits looking at the short term potential of the stock.
2. As an exception to above 'blindly selling' approach, there are few stocks that I decided to hold on for a 'better' price that never came my way :) Spice Telecom is a good example. I was impressed by the great Telecom story, acquisition potential, expanding user base and quarter on quarter performance improvement by most of the Telecom players. I waited for more than 6 months and finally sold the last chunk recenmtly at loss but made a small profit overall. Learning is that fundamentally Spice is not a strong stock. Financial health is weak, market leadership is not strong and top of it all, then started the great specturm confusion by our regulators.

Nevertheless, I have done some bottom fishing in the recent lows. Bought back Power Grid at 98 and Mundra at 700. I will sell these back when they are 20/30 % +.

Most importantly. I have not included Yes Bank and NTPC here. They are part of my core portfolio and Yes Bank, in particular, has been the most profitable investment I have ever made. Both Yes & NTPC, I got allotment in IPO and then started investing as I psychologically found them attractive as they were 'low priced'. From there on, I kept observing them quarter on quarter and have a reasonable holding now. No plan to sell in the foreseable future, except for forces majure reasons.

I don't plan to invest in primary market for next few months, unless the sentiments improve. By the way, I will write some other time about what's my approach while deciding whether to invest in an IPO or not.

Regards,

Rohit