Build a Profitable Portfolio by Cloning Already Proven Investors (8 Stocks Inside)

November 25, 2017 Sowmay 9

What a crazy year it’s been, from the stable regime to visible sustainable growth. Is the Stock Market Overvalued? It’s a legit debate and everyone from contrarian investor to market regulators want in. Look.

But it doesn’t really matter. Opportunity always stays in the market. Yes, I agree, it’s hard to find those opportunities in prevailing bullish market. It happens. That’s why value investing loses relevance in a bull market and growth investing gains prominence.

I started investing at a tender age of 18 so I had abundance time to try different strategies. From Charting to Value Picking, I tried my hands on almost every applicable strategy I had ever read.

Since last 2 quarters, I’m striving hard to create something more innovative, Cloning Strategy, a term coined by Mohnish Pabrai. He clones portfolios of renown investors in US market like Warren Buffett (source) and had a very good track record by beating the S&P 500 by 10%+ annualized since 2000 (source).

I’m struggling to build a system to implement this strategy in Indian Market. So far, we had figured out a process that has allowed me to follow big bullies of market consistently — a process I could replicate. I am now at a point where I’m adding more and more excellent stocks in my portfolio.

Let me provide you with quick insights on how this whole system works. Peek inside my email inbox (dated 13th Oct 2017).

Anil Goel Shareholding

The SEBI rules dictate that companies must reveal the identities of all shareholders who own more than 1% of the shareholding of the company each quarter end. BSE Notifier (more on this later) quickly notified me (along with all other users) about this information.

So we can broadly divide these emails into 2 categories.

  • Is Holding.
  • Picked Up.

You can easily figure out the difference by looking at email subjects. Some email states:

  • XYZ is holding the stock (dictates that the investor is holding x% of shares in this recent quarter.
  • XYZ picked up (dictates that the investor bought >1% holding in the stock in this recent quarter).

So the former doesn’t have any instant change in current market situations but as per my previous experience, I’m damn sure that the later case spikes the price. See.

Rain Industry jumped 4% intraday on Thursday (6th July). A simple Google search will swamp you with more than enough results.

dolly khanna google

Because of a well know lady investor “Dolly Khanna”. Whenever she invests, it absolutely becomes a news. In the first quarter of current FY, she bought 42.68 lakh shares of Rain Ind, accounts for 1.27% of total shares.

Here’s the Rain Ind shareholding pattern of public shareholders (direct link).

dolly khanna shareholding

So usually price hikes whenever a new popular name gets added into shareholding pattern of the company.

. . .

But seems like this doesn’t work with Anil Goel Case. Check out the red marked section in the very first image saying, Anil Kumar Goel picked up 1.53% stake in Triveni Engineering & Industry.

As the email subject states “picked up”, I quickly crossed checked whether there’s any movement in the price.

Sad to know, no movement at all. Doubt. Does this strategy work?

This simply means that the information was already dissolved before the recent shareholding pattern gets public because The market always reacts to every piece of information which change the fundamental of the company. Big bullies of Dalal Street acquiring a position in a company is a very big positive impact.

So I did a quick search on Google. – “Anil Kumar Goel Triveni Engineering”

anil goel google

And didn’t take much time to figure out that the information was already publicly available on 19th of July via some different source. Which?

Bulk/Block Deals.

Here comes another concept of bulk & block deals. SEBI states that if these deals happen, then exchange must have to make this information public after market hours.

Side Note: When a single investor in a single or multiple transactions has either purchased or sold more than 0.5% of a company’s equity shares, then it said to be bulk deal.

I quickly verified the information from BSE, found nothing as the deal was executed on NSE exchange on 19th of July :panil goel bbdeal

Then we started modifying our system for tracking investors in Bulk & Block deals and quickly factor that piece of information to shape our investment decisions. This way, we can form an error-free strategy.

And I’m totally amazed by the results.

So far, I had successfully added 8 stocks in my parallel portfolio build by Cloning Strategy, by following already proven investors live actions in the market.

Now, I started following those big investors and build a parallel portfolio of stocks without reading their balance sheets or reports or knowing their business model. And why would I do that, the stock is already crunched by the investor, known for their wits.

Let me illustrate some of these stocks and I’ll also disclose 8 stocks in the portfolio – which is build by Cloning Other Big Investors Movement in Market – somewhere in the middle of this post.

Hatsun Agro Product Limited

The company is having quite good fundamentals. It manufactures & markets products that cater to both cooking and consumption, like milk, curd, ice creams, dairy whitener, skimmed milk powder, ghee, paneer and lots more.

Recently, it started receiving lots of institutional coverage.

hatsun bbdeals

Do check out following links.

  • (3rd Oct 17) SBI Mutual Fund bought 10.5 lakh shares (Source).
  • (10th Nov 17) DSP Blackrock bought 37.8 lakh shares (Source).
  • (10th Nov 17) Malabar India bought 12.9 lakh shares (Source).

Despite having +70 PE and +25 PBV ratio, the institutions don’t seem to care which purely indicate its good future growth rate.

The stock halted at upper circuit on next trading day, however, I was not fortunate enough to enter this stock at right time. Sad.hatsun chart

Thangamayil Jewellery Ltd

Thangamayil Jewellery Ltd operates in – as the name suggest – Jewellery business, mostly in South India. They have a good market presence and are growing at very great pace.

On 16th of Nov, Old Bridge Capital bought 4,89,427 shares @ Rs. 410 via bulk deal operations.

Kenneth Andrade, Founder and Chief Investment Officer of Old Bridge, known for identifying businesses early in a cycle. And on the other hand, promoter Balusamy Tamesh sold the shares to meet the demand.thanga bbdeal

Check out last 2nd and 3rd record of the bulk deal report. So that’s how, my friend, promoters and financial institutions uninterruptedly buy/sell stocks in the open market despite holding huge chunks.

And since last 2 trading days, the stock keeps halting up at an upper circuit.

thanga chart

Khaitan Chemicals

Generally – small investors (you & me) – stay unaware of what’s happening under the hood of the stock market and how to determine next multi-bagger stocks in Indian Market.

A few days back, I was notified about the BSE Bulk deal reports on 1st Of Nov. An investor named, HONEY BRICKS PROPERTY MANAGEMENT PRIVATE LIMITED bought around 5,00,000 shares of Khaitan Chemicals.

khaitan bbdeals

What’s special about Honey Bricks Pvt. Ltd.?

Here’s a snapshot of the information of Honey Bricks Pvt. Ltd. from ZaubaCorp website (Check out).

porinju director

Yes, that’s Porunju Veliyath, one of the top retail investor in India. He is a director of this company. No more words needed to justify Honey Bricks.

What’s special about Khaitan Chemical?

A very small listed company with a market cap of 150 Crores and sales turnover is a bit less than 400 Crores. Remember, small-scale companies are the one which turns to be multi-baggers.

So I think, that’s the perfect match for multi-bagger stock and a perfect way to identify a multi-bagger stocks. You can use BSE Notifier for daily bulk/block deal alerts.

But, guess what? On 2 Nov, the stock was locked up at upper circuit 🙁

khaitan chart

Similarly, I entered in few more stocks by checking out daily bulk and block deal alerts. Currently, the portfolio consists following stocks.

Format – Stock (Investor who bought stake).

  • BCL Infra (Equity Intelligence).
  • Haryana Ship (Dheeraj Lohia).
  • KhaiChem (Honey Brick).
  • PC Cosma (Dheeraj Lohia).
  • Balaji Amines (3 Investors including Pabrai Group).
  • Kitex Garments (Value Quest).
  • PDSMFL (Dheeraj Lohia).
  • ThangaMayl (Old Bridge Capital).

I usually keep tweeting about these opportunities on my twitter handler, exactly on the same day I get this information. For example:

You can follow and enable mobile notifications to get instant alerts for all of these tweets.

Dear Sowmay, How can I get this information at earliest?

I didn’t found any tool to do that on the whole internet so I created my own tool, BSE Notifier. Register and check out its bulk/block deal section. It’s paid though but you will get 20-day free trial upon signing up. Give it a try. I bet you’ll love it.

BSE Notifier

Maximum Delay will be not more than 15 minutes. Here’s one of the examples of NSE Block deal alert page.

Dear Sowmay, Is there any way to enter those stocks at soonest after the information is publicly disseminated via bulk/block reports?

Most of the time, I used bulk/block deals to find these opportunities and these deals are announced after trading hours end.

You might have sensed the rush on opening price in all above price charts. Upper Circuit.

Even I myself, being a night hawker, can’t spring up on screen exactly at 9:00 AM to place a buy market order.

Stock Exchange follow First In First Out (FIFO) method to execute the orders, so you have to quickly place an order to enter the stock at earliest. Here’s what you can do at earliest without leaving your bed at morning.

Ask your broker if they have any feature named AMO (After Market Orders). It simply means, you can place an order aftermarket trading hours end and that order will be executed on next day automatically. Learn more about the pre-market session to get a clarity on this topic.

My broker, Zerodha have an option which allows me to put AMO orders which will get executed on next trading day automatically in usually first 30 seconds of the market starts taking orders (starting 9:00 AM).

Zerodha Kite AMO

However, this feature might differ from broker to broker. Do inquire them.

So that’s my whole setup of my recent grown Cloning Strategy. As it’s not been a long time implementing this strategy so can’t provide you exact numbers.

It’s very beneficial for naive investors to list down fundamentally strong companies to invest without any prior R&D. We will keep doing pretty funny things and came out with some awesome conclusions.

Stay in touch. Have any queries? Click to Tweet: Dear Sowmay…