My Coffee Can Investing from Diwali 19 to Diwali 24

[Subhadip]

Coffee Can investing is buy and forget investing strategy for a certain period of time and for some people, the holding period is ‘forever’.

I have tried to create 3 coffee cans for myself.
Methodology: There is no secret about this. These are companies with good management, consistent performance and more importantly which have given the best growth in the last five years. The philosophy is if they have grown in the last five years they might continue on the same path for the next five years too. From the Nifty 50 and other large caps, I have looked at the stock price growth from Oct 2014 to Oct 2019 and ranked them according to the rate of growth of stock prices. I shortlisted 25 stocks. These I divided into two Coffee Cans. The top 10 goes to Coffee Can 1 and the other 15 to Coffee Can 2. I thought I should have only 10 stocks in CC2 too but since some of my fav stocks were ranked beyond 20, I stretched the CC2 to include them.
Once we buy these stocks we would be worried about corrections. I checked the corrections that these stocks have gone through in the past five years and find that rarely does the correction go beyond 30% and most often this happens once a year. I will post the corrections of each of these stock in the last five years.
Weight
I was wondering how to give weight to each of these stocks within the portfolio. One method is to give all of them equal weight. Say our portfolio is of one lakh, then give ten thousand to each of the ten stocks in CC1. But I found this dissatisfactory. I decided to allot them in the ratio of their growth. This I am assuming is aggressive but I think the best-growing companies need more capital allocation from our side in the portfolio.

Here is the portfolio of CC1

1. Bajaj Finance: This stock has had growth from 280 in Oct 2014 to about 3980 in Oct 19. It has grown 14 times at a phenomenal CAGR of 70%.
2. Bajaj Finserv: 1068 to 7978. CAGR 50%
3. Aarti Industries: 152 to 869. CAGR 41.72%
4. PGHL: 817 to 4407 CAGR 40%
5. Vinati Organics: 428 to 2109 CAGR 37%
6. Whirlpool: 492 to 2140 CAGR 34%
7. Britannia: 765 to 3270 CAGR 33.7%
8. Astral: 272 to 1124 CAGR 32.8%
9. Jubilant Life Sciences: 144 to 559 CAGR 31%
10. Abbott: 3098 to 11400 CAGR 29%

The weight I have allocated to each of the stock based on their CAGR is as follows: BF(17.5), BFS(12.37), Aarti(10.43), PGHL (10), Vinati(9.39), Whirlpool(8.54), Britannia(8.43), Astral(8.20), JubiliantLS(7.79), and Abbot (7.44)

For every lac I can allot to this portfolio, I should be having the following number of stocks at recent close: BF(4), BFS(2), Aarti(12), PGHL (2), Vinati(4), Whirlpool(4), Britannia(2), Astral(7), JubiliantLS(13), and Abbot (1). I had to make a small adjustment as we cannot buy the share in decimals. For instance, Abbot with its weight had to be bought .65 of the share. In such cases, I have rounded it to the nearest whole number.

This CC1 I am actually going to create in my account in the following week and monitor its performance.
CC2 consists of the next 15 stocks with best returns in the last five years. They are (Stock, CAGR, weight in the portfolio, number of stocks in a portfolio of Rs 1.18000/- This portfolio I could not adjust it to the round figure of 1lac. Either I had to leave some stocks out or change the weight. I took the easy path of increasing the portfolio size.

1. Bergerpaints, 28.16, 7.71, 16 Shares
2. Ionexchange, 27.84, 7.63, 11 Shares
3. Titan, 27.66, 7.58, 6 Shares
4. Atul, 27.22, 7.45, 2 Shares
5. Pidlite, 26.52, 7.26, 5 Shares
6. PIInd, 25.16, 6.89, 5 Shares
7. Hindunilvr, 23.76, 6.5, 3 Shares
8. Reliance, 23.40, 6.4, 4 Shares
9. Kotakbank, 23.20, 6.35, 4 Shares
10. Gillette, 22.85, 6.26, 1 Share
11. BataIndia, 22.6, 6.19, 3 Shares
12. Asianpaints, 22.26, 6.09, 3 Shares
13. HDFCBank, 21.93, 6.00, 5 Shares
14. Pageind, 21.32, 5.84, 1 Share
15. Alkylamine, 21.26, 5.82, 6 Shares

CC3 consists of 10 stocks which do have a past record of five years but which I believe are in the early stages of compounding growth and may become the wealth creators over a period of time. Since this would be based on perception rather than backed by hard data, I decided on equal weight to all the 10 stocks in this. So a portfolio of 1lac will allot ten thousand worth of share to each of the stock. This list is (DMart, SBILife, HDFC Life, HDFCAMC, RNAM, IRCTC, Hester, Torrent Pharma, Lal Path, GMM)

Exit on one condition: Although this is a buy and forget kind of investing, I wanted to keep the back door open in case some company goes rogue. So I will exit on the following condition. Wait for three consecutive monthly close below SMA(low, 7). When the lowest of those three bars break, I will exit the position and renter when I can see two consecutive monthly closes above SMA(high,7) and the higher high is taken out. In the last five years, only Vinati Organics and Jubilant Life Sciences have given one exit each. None of the 25 stocks had three consecutive monthly closes below SMA (low, 7).

I will complete CC1 and CC3 and then do CC2. Where I already have some of them in the portfolio, I will be rebalancing it to reflect the above weights.

Do let me know if I have missed any stocks or I need to allot a different kind of weight to the stocks.

Good job....keep track monthly

 

[shivani bansal]

@trader.trends thanks a lot for sharing this.

 

[trader.trends]

Most of the stocks in my coffee can are up 2-3% today covering the lost ground on Saturday. An earlier version of me would have dumped all the stocks on seeing such a long red bar. This version says events will come and pass, don't time the markets. If I get out then might not get the opportunity to get in at a decent price. When I take a really long term perspective and the stock selections are sound, I feel peaceful to leave the portfolio untouched but just add when the opportunity arises.

 

[TraderRavi]

Coffee Can investing is buy and forget investing strategy for a certain period of time and for some people, the holding period is ‘forever’.

I have tried to create 3 coffee cans for myself.
Methodology: There is no secret about this. These are companies with good management, consistent performance and more importantly which have given the best growth in the last five years. The philosophy is if they have grown in the last five years they might continue on the same path for the next five years too. From the Nifty 50 and other large caps, I have looked at the stock price growth from Oct 2014 to Oct 2019 and ranked them according to the rate of growth of stock prices. I shortlisted 25 stocks. These I divided into two Coffee Cans. The top 10 goes to Coffee Can 1 and the other 15 to Coffee Can 2. I thought I should have only 10 stocks in CC2 too but since some of my fav stocks were ranked beyond 20, I stretched the CC2 to include them.
Once we buy these stocks we would be worried about corrections. I checked the corrections that these stocks have gone through in the past five years and find that rarely does the correction go beyond 30% and most often this happens once a year. I will post the corrections of each of these stock in the last five years.
Weight
I was wondering how to give weight to each of these stocks within the portfolio. One method is to give all of them equal weight. Say our portfolio is of one lakh, then give ten thousand to each of the ten stocks in CC1. But I found this dissatisfactory. I decided to allot them in the ratio of their growth. This I am assuming is aggressive but I think the best-growing companies need more capital allocation from our side in the portfolio.

Here is the portfolio of CC1

1. Bajaj Finance: This stock has had growth from 280 in Oct 2014 to about 3980 in Oct 19. It has grown 14 times at a phenomenal CAGR of 70%.
2. Bajaj Finserv: 1068 to 7978. CAGR 50%
3. Aarti Industries: 152 to 869. CAGR 41.72%
4. PGHL: 817 to 4407 CAGR 40%
5. Vinati Organics: 428 to 2109 CAGR 37%
6. Whirlpool: 492 to 2140 CAGR 34%
7. Britannia: 765 to 3270 CAGR 33.7%
8. Astral: 272 to 1124 CAGR 32.8%
9. Jubilant Life Sciences: 144 to 559 CAGR 31%
10. Abbott: 3098 to 11400 CAGR 29%

The weight I have allocated to each of the stock based on their CAGR is as follows: BF(17.5), BFS(12.37), Aarti(10.43), PGHL (10), Vinati(9.39), Whirlpool(8.54), Britannia(8.43), Astral(8.20), JubiliantLS(7.79), and Abbot (7.44)

For every lac I can allot to this portfolio, I should be having the following number of stocks at recent close: BF(4), BFS(2), Aarti(12), PGHL (2), Vinati(4), Whirlpool(4), Britannia(2), Astral(7), JubiliantLS(13), and Abbot (1). I had to make a small adjustment as we cannot buy the share in decimals. For instance, Abbot with its weight had to be bought .65 of the share. In such cases, I have rounded it to the nearest whole number.

This CC1 I am actually going to create in my account in the following week and monitor its performance.
CC2 consists of the next 15 stocks with best returns in the last five years. They are (Stock, CAGR, weight in the portfolio, number of stocks in a portfolio of Rs 1.18000/- This portfolio I could not adjust it to the round figure of 1lac. Either I had to leave some stocks out or change the weight. I took the easy path of increasing the portfolio size.

1. Bergerpaints, 28.16, 7.71, 16 Shares
2. Ionexchange, 27.84, 7.63, 11 Shares
3. Titan, 27.66, 7.58, 6 Shares
4. Atul, 27.22, 7.45, 2 Shares
5. Pidlite, 26.52, 7.26, 5 Shares
6. PIInd, 25.16, 6.89, 5 Shares
7. Hindunilvr, 23.76, 6.5, 3 Shares
8. Reliance, 23.40, 6.4, 4 Shares
9. Kotakbank, 23.20, 6.35, 4 Shares
10. Gillette, 22.85, 6.26, 1 Share
11. BataIndia, 22.6, 6.19, 3 Shares
12. Asianpaints, 22.26, 6.09, 3 Shares
13. HDFCBank, 21.93, 6.00, 5 Shares
14. Pageind, 21.32, 5.84, 1 Share
15. Alkylamine, 21.26, 5.82, 6 Shares

CC3 consists of 10 stocks which do have a past record of five years but which I believe are in the early stages of compounding growth and may become the wealth creators over a period of time. Since this would be based on perception rather than backed by hard data, I decided on equal weight to all the 10 stocks in this. So a portfolio of 1lac will allot ten thousand worth of share to each of the stock. This list is (DMart, SBILife, HDFC Life, HDFCAMC, RNAM, IRCTC, Hester, Torrent Pharma, Lal Path, GMM)

Exit on one condition: Although this is a buy and forget kind of investing, I wanted to keep the back door open in case some company goes rogue. So I will exit on the following condition. Wait for three consecutive monthly close below SMA(low, 7). When the lowest of those three bars break, I will exit the position and renter when I can see two consecutive monthly closes above SMA(high,7) and the higher high is taken out. In the last five years, only Vinati Organics and Jubilant Life Sciences have given one exit each. None of the 25 stocks had three consecutive monthly closes below SMA (low, 7).

I will complete CC1 and CC3 and then do CC2. Where I already have some of them in the portfolio, I will be rebalancing it to reflect the above weights.

Do let me know if I have missed any stocks or I need to allot a different kind of weight to the stocks.

Great job bhai.

 

[prst]

nice strategy sir.
good that only 2 stocks gave an exit all these years. Do u plan to get back into these stocks in the future based on any trigger?
Also, is it a good idea to have a fixed stop loss, such as 20% or 30%?