Portfolio Shuffling

So lot's happening with my portfolio. Let me try to give a quick update. I took a first major decision regarding my core direct equity portfolio and decided to sell Petronet LNG.

The biggest concern is the changing demand and supply scenario in India. Domestic Gas discoveries are rising. It seems very strongly that we will we a Gas surplus economy in next few years. Imported Gas will not be competitive thus. Also, Petronet has not been able to further tie up Long term LNG supplies. Kochi terminal is delayed by 2 years.

Current buoyancy in the stock is due to spot cargo volumes & appreciating rupee. These are short term / not so reliable factors. Also, regulatory intervention is very high as you can see from recent order to change the way Petronet sells LNG esp. to benefit Dhabhol.

Incidentally, except for Kotak brokerage house, everyone else is bullish on Petronet and recommending a buy. You can get the research reports from deadpresident's blog. For sure, I know, 15/20% upside is possible in Petronet due to short term factors. Over a period of next 2-3 years it can perhaps double from current levels. Though my feel is that this will not be a ten bagger and this cannot be a long term play. If it cannot be long term, I am not interested. So I have started selling my holdings.

Here is my Core Direct Equity Portfolio.

1. Reliance Industry
2. Infosys
3. NTPC
4. Yes Bank
5. Bharti Airtel
6. MindTree Consulting

Bharti Airtel is a recent addition. I have MindTree from its IPO time though I am not buying lot many shares. Priority is to buy as much shares as possible of Yes Bank and NTPC. Once in a while, I keep buying Reliance and Infosys. Heavy focus is on Yes Bank from the perspective that, to my mind, it has greatest potential to rise in the market.

I have also invested some of my IPO profits into IFCI. I usually don't like short term investing. This looks like a special situation case. At current levels of 80, I have made 20% profits. I expect the stock to go around 100-110 in next 4-6 months. I did not do a great amount of research. Just looked at few research reports and they suggest that intrinsic value is around 90 rupees considering the stake that IFCI has in so many companies.

I also don't like IPO trading. Though I invest in very few chosen IPOs where pricing looks attractive & one can make 20% or so in a short time. Again the same strategy. If I were to apply for an IPO, I would try and apply from all my family accounts so that allotment chances are maximum and my time looking into the IPO is justified by the returns. Most of the IPOs I get allotment, I sell quickly booking whatever profit. Some of them are good stocks but I have limited capital that can go into long term investing and that allocation has already been done in favor of chosen core equity portfolio stocks. Also, since I usually don't sell my core portfolio stocks at all, it's good to do some booking of profits, somewhere.

I made few changes in my core MF portfolio as well. Last few months, I have sold Franklin Opportunities, Franklin Prima and now started selling Franklin India Flexicap. Incidentally all these belong to Franklin Group. Not intentional ! Proceeds from selling Franklin Flexicap will go towards buying more of Magnum Contra. It's proportion is low compared to other schemes. It's doing well. So I am buying more.

I am building my MF Portfolio. Here is the list:

1. DSP ML Tiger & ICICI Pru Infrastructure - Thematic funds
2. DSP ML Opportunities - Opportunities funds
3. HDFC Tax Saver & Magnum Taxgain - ELSS Funds
4. Fidelity Equity & HDFC Equity - Large Caps
5. HDFC Prudence - Balance funds
6. Reliance Growth - Mid Cap funds
7. Magnum Contra - Contra funds

I also have Sundaram Select Mid Cap. Fund is not doing very well and I am happy with Reliance Growth. So I will start selling Sundaram Select Mid Cap very soon & shift money to Nifty Junior BeES.

I also started buying Benchmark Bank BeES and Nifty Junior BeES. I am eyeing Nifty BeES now. It's low expense (0.30%) is mouth watering. I am really really looking at a long term so these expenses do matter. Over next few years, I hope to make index funds to constitute like 40/50% of MF Portfolio. I may add ICICI Pru SPICE index fund at a later date.

I usually don't sell investments for less than a year to avoid paying short term capital gain tax and also to avoid getting into the hassle of tax returns preparation.

One common element of both Direct Equity and MF strategy is to build substantial positions, over next few years, in few identified stocks/schemes. I know this increases risk but I think overall the portfolio is quite diversified. More about this sometime later.

These are big decisions. So let's hope for the best !