A Year into Value Investment Blogging: Time to Do Reality Check!

It has been almost a year, since I started this blog on value investing and let me take this opportunity to thank fellow investors who have not only regularly read the blog but also have provided their suggestions, critique, inputs, questions and insights. This involvement and interactions, with number of fellow investors ranging from novice to veterans, have made this journey an enriching experience for me. I sincerely thank all the readers from bottom of my heart  for their wholesome participation and look froward to more and more interaction in coming time.

Over one year, I have posted number of ideas which I thought made sense from value investing framework and I had highest conviction in. I also tried to write about ideas where I myself will be willing to put money so as to make sure I had complete buy in before putting the idea into public domain. Most of the ideas discussed (not all) on this blog are/were part of my portfolio at some time or the other. As I started the blog, one of the objective of writing a blog was to document my investment rationale/hypothesis behind businesses that I buy and to keep tab on how my ideas perform over a period of time. Even though, in value investing, one year is not an appropriate time frame to evaluate the performance of a portfolio, it does serve as milestone indicating whether one is traveling on a right path or not. It is like a mid term exams! 

I take this opportunity to acknowledge that the idea of evaluating performance of my idea is derived from the work done from Vishal (Valueinvest30) who took pain to put together buy price/date of post for all the ideas posted on this blog. Thanks Vishal for that. This prompted me to think that I should assess performance of the ideas posted on this blog for the sake of transparency and getting a sense on direction . It doesn't matter, how the portfolio performs, but it gives me and blog readers some idea about what went right and where it did go wrong.  I also plan to make it yearly ritual  of evaluating performance around same time frame to keep things consistent from evaluation perspective.

While I do not carry all stock in my portfolio in same proportion in terms of capital allocation, for the sake of simplicity and to generalize the results,I have done my performance analysis assuming roughly 10,000 allocated to each idea. I have assume closing price as average buying price on the day I wrote the post about a particular idea. Today's closing price is taken as CMP and returns are calculated on CMP. 

Security Name	Date  Blog Posted	Buy  Price	Buy           Quantity	Amount  Invested	CMP	Current Amt	%Gain
J B Chem	24/11/2011	68.5	140	9590	69	9660	0.73%
Cera Sanitaryware	29/09/2011	178	55	9790	375	20625	111%
Mayur Uniquoter	11/12/2011	167	60	10020	430	25800	158%
Sintex Industries	29/12/2011	62	160	9920	67	10712	8%
Oriental Carbon	07/01/2012	91	110	10010	160	17600	78%
Shriram Transport	18/01/2012	534	20	10640	605	12100	14%
Gujarat Reclaim	29/02/2012	1398	7	9786	1625	11375	16%
Piramal Enterprise	24/03/2012	455	22	10010	495	10890	9%
Narmada Gelatine	30/03/2012	96	105	10080	134	14070	40%
Mazda Ltd	30/04/2012	93	110	10230	96	10560	3%
Atul Auto	19/05/2012	100	100	10000	111	11100	11%
Amara Raja Batteries	19/05/2012	138	75	10350	224	16800	62%
Fluidomat	19/05/2012	32	310	9920	38	11780	19%
Swaraj Engines	19/05/2012	402	25	10050	440	11000	10%
Wim Plast	19/05/2012	201	50	10050	362	18100	80%
Hindustan Zinc	29/06/2012	112	90	10080	132	11880	18%
GSFC	16/07/2012	71	145	10295	75.5	10947	6%
Total				170711		235000	38%
Sensex	26/10/2011			17289		18625	7.72%

As it is evident from the above table that some of the securities performed extremely well even in over all depressed markets while other did reasonably well. There are few securities which performed worse than benchmark and dampened the overall returns. However, portfolio as a whole did manage to perform well as it generated 38% absolute returns (not annualized as many of the opportunities are less than 6 months old) on amount invested. Now, if one would have invested same amount in nifty/Sensex based index funds, returns will be in the range of 7-8%. Thus, at least for this year additional effort put into finding opportunities seems to be well rewarded.

Even though, these are early days, a pattern emerging from the performance analysis is that combination of undervaluation and great business (Cera, Amara Raja, Mayur, Wim Plast, Oriental Carbon) is likely to fetch far superior returns than finding out business available at deep discount but mediocre/average in nature. However, as I said earlier, these are early days and it is not worth jumping to conclusion. 

Among the under performers, I am very positive on Atul Auto, Piramal Enterprise, GRP and Shriram Transport. 

Mazda and JB chemicals remain value play. However, post JB chemical's announcement about dispute with J&J regarding amount put in escrow account from  sale of Russia-CIS business, margin of safety has reduced. I have partially exited (roughly 50%) at marginal gain, rest 50%,I continue to hold. For Mazda, undervaluation remains. 

Disclosure: Views posted here are personal and shall not be construed as investment advise on buying or selling. One must do his own due diligence before making investment decision. My views can be biased as I hold position in many of the companies discussed here.