4 Ways to Understand Value Stock Picking
From the father of Value Investing – Benjamin Graham to Legendary Investor Motilal Oswal Co Founder – Raamdeo Agarwal, both advocating the same Timeless Principles of Stock Picking ( His Networth Exceedes 1 Bn USD According to Forbes )
In my last blog i have written the value picking principles from Famous Book – The Intelligent Investor and in this blog lets understand how Indian Legendary Investor has succeeded in Value picking
Raamdeo Agarwal’s Notable investments are
Here are a few of the famous and most profitable investments made by Mr. Raamdeo Agarwal in the early phase of his career:
- Hero Honda – He had purchased Hero Honda stock at Rs. 30 in 1996 and sold it Rs. 2600 in the year 2016. In the 20 year period, he also received a dividend of around Rs 600 per share.
- Infosys – He purchased shares of Infosys in mid-90s and sold them to get a return of over 12 times. In this holding period, he also received consistent bonuses and dividends from this stock.
- Eicher Motors – He purchased Eicher at Rs. 900. The investment touched over Rs. 32,000 in 2017.
Raamdeo an investor for his personal purposes should have invested in a maximum of 15 stocks. According to him, 15 stocks is too much. He instead would suggest 10 stocks. Investing in multiple stocks gives investors the benefits of diversification.
The Secret Formula behind Raamdeo Agarwal is QGLP
He purchased shares of Financial Technologies at 1150 and forced to sell it up at 150, he not only made losses with this stock and also a lesson that how quality is important when it comes to stock picking.
Quality ensures Strong Management, Leadership, Competitiveness, Share among Competition, Geography Presence and ability to offer the product at a reasonable price so that they can scale it up.
If the company is not growing atleast twice of the GDP – Never buy the share of the company. Quarter of quarter growth on Turn Over & Profits are Key Ratio to check the Growth of the company
Average staying period of investor in stock market is 3.2 Years. Buying a stock is equal to building a business than participating in business. So Buy Right and Sit Tight is the formula he always advocates
Valuations and Price are always an important factor to evaluate the entry point. If the price is not sync with the Intrinsic Value, Price to Book Value and Price Earnings Ratio are critical
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