Building conviction on existing portfolio stocks is complex…

https://t.co/KQkupOeFzp financial statements and results on quarterly basis to evaluate whether your thesis on company is still intact through growth in revenue, profits and cash. You cannot rely only on whats app forwards or brokerage updates.

2.Quarterly Con-Calls post result covering enviornment of the sector in which company operates, future expansion plans, & companies confidence in responding to fund managers. (For eg, in my evening walks, i listen to con-calls on You tube rather than music to utilize the time.)

3. High conviction is build when you compare py qtr or py year con call scripts and see whether company giving forward statements were met in subsequent quarters or not. For eg company said they will be doing CAPEX for 100 crores in FY 2020 and then we can see current state.

4. Profits not growing qtr or qt or yr on yr is not the sign for low conviction. You need to screen the balance sheet to see if the company has taken huge R&D expenditure which they believe is right for company as they build new products for future years, then that make sense

5. Current PE of stock is not relevant as forward looking PE. So company might be expensive now but future profitability projection is very high due to company’s strength or Industry tailwaind and hence stock is still cheap. So we should see 2 year forward PE rather than current.

6. Companies that have invested in capex over last 3-4 years. Check whether they have maintain debt level at lower levels or maintained at current level. This means that cash generated from operating activities has been directed towards further business expansion.

7. Everyone does “Avg down”, but important to do “Avg Up” and that happens when conviction is high. For the stocks that meet the thesis, we shouldnt wait for momentum, when they are either consolidating (price wise or time wise) or even going up, we should add as runway is huge.

8.Appropriate allocation does not meet high allocation in beginning. “Appropriate allocation means building position in stock as you understand and see company’s progress over quarter and years”

9.……………..Learning process is continuing…

Building conviction on existing portfolio stocks is complex topic. I am still learning and have only 2-3 years exp. Lot of learning is inspired from @varinder_bansal as part of omkara family, listening to old colleage @connectgurmeet on news channel and @unseenvalue posts

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