Bajaj Finance & CAMS- Undervalued now? [and 3 other stocks] | Akshat Shrivastava
Summary
TLDRIn this video, investor Akshat Shrivastava discusses strategic shifts in his portfolio due to market risks. He has sold his small cap index fund, citing high valuations and market conditions, and is now focusing on US stocks and mid to large-cap companies. Akshat shares insights on companies like CAMS and Aavas, emphasizing the importance of fundamental analysis and avoiding overvalued stocks. He also touches on the potential impact of interest rate cuts on various sectors and provides a macro view of the market's future direction.
Takeaways
- 📉 Akshat Shrivastava has repositioned his portfolio due to perceived market risks, selling his entire small cap 250 Index fund.
- 🧐 He is moving towards US stocks and mid-cap to large-cap companies, aiming to rebalance and reposition his portfolio in response to market conditions.
- 🤔 Akshat has shared insights from his experiences as a full-time investor and hedge fund manager, emphasizing the importance of adapting to market changes.
- 💰 He has exited his small cap position with a 40% gain, reasoning that the small cap index has seen significant run-ups and is now fairly valued with high market risk.
- 📊 The small cap index has provided substantial returns over the last four years, but Akshat suggests that the returns may average out to a 24-25% CAGR, indicating a potential slowdown.
- 🇮🇳 The video discusses the dynamics of the Indian market, where domestic institutional investors (DIIs) have been buying mid-cap and small-cap stocks, affecting market trends.
- 📈 CAMPs is highlighted as a case study for investment, with Akshat noting its potential as the stock market is expected to stabilize or move sideways, benefiting such companies.
- 🏘️ Aavas Financial Services is still considered a good investment due to its strong revenue and profit, and the potential for lower interest rates to boost its business.
- 💡 Akshat predicts that companies like Bajaj Finance and consumer durables stocks like Voltas and Whirlpool will benefit from expected interest rate cuts.
- ❌ He warns against high-risk stocks involved in pump-and-dump schemes and advises caution with overvalued companies like Zomato compared to its peers.
- 📚 The importance of fundamental analysis, patience, and avoiding overvalued stocks is emphasized for long-term investment success.
Q & A
What is the main topic of the video?
-The main topic of the video is discussing critical changes in the speaker's investment portfolio due to perceived market risks.
Why did the speaker sell his small cap 250 Index fund?
-The speaker sold his small cap 250 Index fund because he believes there is a lot of risk in the markets currently and he is repositioning his portfolio to mitigate this risk.
What types of companies is the speaker adding to his portfolio?
-The speaker is adding US stocks and certain types of mid-cap to large-cap companies to his portfolio.
What is Akshat Shrivastava's current occupation?
-Akshat Shrivastava is a full-time investor who travels across the globe, gains insights, works with high net worth individuals (HNIs), and runs his hedge fund.
Why did the speaker decide to cut his entire small cap position?
-The speaker decided to cut his entire small cap position because the small cap index has seen a significant run-up and currently appears fairly valued, with the market risk looking a bit high from an India investing viewpoint.
What is the speaker's view on the future of the stock market in India?
-The speaker's prognosis as an investor is that the market can be taken sideways with unlikely deep corrections, as stock market returns have become a political issue between two parties.
What is the speaker's strategy regarding CAMS and CDSL stocks?
-The speaker is aggregating CAMS and CDSL stocks, trying to buy them at dips, as he believes these companies are less likely to be hurt unless the stock market is going down significantly.
What are the speaker's thoughts on Aavas Financial stock?
-The speaker believes Aavas Financial is still available at a discount and is a lower-risk investment due to its high revenues and profits, and the potential for interest rate cuts benefiting the housing finance sector.
What is the speaker's view on Bajaj Finance and the impact of interest rate cuts?
-The speaker sees Bajaj Finance as a good investment level currently, expecting the consumer lending space to improve with the anticipated interest rate cuts, which would benefit companies like Bajaj Finance.
What are the two themes the speaker has been discussing on his YouTube channel?
-The two themes the speaker has been discussing are the potential benefit of interest rate cuts on certain stocks, and the performance of consumer durables companies like Voltas and Whirlpool.
What is the speaker's advice on high-risk stocks and pump-and-dump schemes?
-The speaker advises to avoid high-risk stocks and pump-and-dump schemes, as they can be detrimental to investors, especially in the current market conditions.
How does the speaker approach the valuation of Zomato compared to its peer Swiggy?
-The speaker has reduced his position in Zomato due to its higher valuation compared to Swiggy, which he sees as available at a significantly lower price, indicating a potential overvaluation of Zomato.
What is the speaker's final advice for investors regarding portfolio management?
-The speaker's final advice is to study the fundamentals of stocks, avoid overvalued investments, have patience with good stocks, and sell or reduce positions when they become overvalued compared to their peers.
Outlines
📉 Portfolio Repositioning Amid Market Risks
Akshat Shrivastava introduces the video by discussing significant changes he's making to his investment portfolio due to perceived market risks. He has sold his entire small cap 250 Index fund, which had shown substantial gains, and is now focusing on adding US stocks, particularly mid-cap to large-cap companies. Akshat, a full-time investor and hedge fund manager, shares insights from his interactions with high-net-worth individuals (HNIs) and his own portfolio management experience. He emphasizes the importance of rebalancing one's portfolio and provides a specific example of his small cap fund's performance, explaining his rationale for selling based on market analysis and future expectations.
📈 CAMS as a Case Study for Portfolio Adjustment
The second paragraph delves into a case study of CAMS, a stock that has seen significant gains and corrections. Akshat outlines the importance of fundamental analysis and provides a brief on the company's performance, market conditions, and potential future movements. He discusses the political implications affecting the stock market in India, particularly the conflict between political parties over stock market performance. Akshat suggests that the market is unlikely to see a deep correction and recommends accumulating stocks like CAMS and CDSL at dips, highlighting the importance of a long-term perspective and the potential benefits of an interest rate cut.
🏦 Analyzing the Impact of Interest Rate Cuts on Stocks
In this paragraph, Akshat discusses the impact of potential interest rate cuts on various stocks, including Bajaj Finance and Aavas. He explains that companies in the consumer lending space, such as Bajaj Finance, are likely to benefit from lower interest rates, which could stimulate consumer loans and improve the lending environment. Akshat also touches on the potential benefits for housing finance companies like Aavas in a low-interest-rate environment. He warns against investing in overvalued stocks and pump-and-dump schemes, advocating for patience and careful study of fundamentals before investing.
🚀 Strategic Stock Rotation and Market Outlook
The final paragraph provides a strategic outlook on stock rotation and the broader market. Akshat shares his personal experience with Zomato, explaining his decision to sell a significant portion of his holdings due to its overvaluation compared to its competitor, Swiggy. He suggests that investors should focus on buying undervalued stocks and selling when they become overvalued. Akshat also hints at a potential market time correction in the coming months or years, advising investors to study the fundamentals, avoid overvalued stocks, and exercise patience for their investments to yield returns.
Mindmap
Keywords
💡Portfolio
💡Risk
💡Small Cap
💡Mid-Cap to Large-Cap
💡Repositioning
💡Hedge Fund
💡Domestic Institutional Investors (DIIs)
💡Systematic Investment Plan (SIP)
💡Overvalued
💡Interest Rate Cut
💡Pump and Dump
💡Fundamental Analysis
💡Technical Analysis
💡Consumer Lending
💡Macro Picture
Highlights
Portfolio repositioning due to perceived market risk.
Sale of small cap 250 Index fund to mitigate risk.
Addition of US stocks and mid-cap to large-cap companies to the portfolio.
Introduction of Akshat Shrivastava, a full-time investor and hedge fund manager.
Explanation of the decision to cut small cap positions based on market performance.
Analysis of small cap index funds' returns and the rationale for their sale.
Discussion on the role of FIIs and DIIs in the Indian market and their impact on mid and small-cap stocks.
Insight into the political influence on stock market movements in India.
Investment in CAMS as a case study for mid to large-cap opportunities.
Market prognosis suggesting a sideways market movement with low probability of a deep correction.
Strategic buying of CAMS and CDSL at market dips.
Aavas financial analysis and its potential benefit from lowering interest rates.
Bajaj Finance's position in the market and its potential growth with interest rate cuts.
TCS and consumer durables stocks like Voltas and Whirlpool as beneficiaries of interest rate cuts.
Warning against high-risk stocks involved in pump and dump schemes.
Zomato's valuation compared to its competitor Swiggy and the decision to rotate investments.
General advice on avoiding overvalued stocks and the importance of patience in fundamental investing.
Invitation to join Akshat's member community and courses for further investment insights.
Transcripts
Hi, everyone. Welcome to today's video. On today's video, I'm going to discuss some of
the critical changes that I'm making on my portfolio. I believe that there is a lot
of risk in the markets right now, so I'm repositioning my portfolio. For example,
I have sold my small cap 250 Index fund, the entirety. It was a lot of money. I had put it
in front of you last year, so I've exited that completely. I'm adding a lot more US stocks,
and there are certain types of mid-cap to large-cap companies that I'm adding into my
portfolio. I'm going to talk about to give you a flavor as to how you can reposition and rebalance
your portfolio. For people who are new to my channel, my name is Akshat Shrivastava. I am a
full-time investor now. I travel across the globe, gain insights, work with a lot of HNI's. I'm
running my hedge fund. I get to speak with a lot of rich people who are running their businesses,
investing money on full-time basis. So whatever insights that I get from them and through my
own experiences of building and managing a fairly big portfolio, I try to share it with all of you.
So on that note, let us kickstart our video and let me take you point-wise as to why am I making
certain type of changes on my portfolio. So the first key major change that I have made on my
portfolio is to cut my entire small cap position. So I'm going to show you. This is one of my mutual
funds, and this is something that I had built publicly last year. You can see that I'm sitting
on roughly 40% gain here. XiRR is only 26 now because I have cut my small cap funds. Now, why
have I cut my small cap index funds? The reason is very simple, and I will tell you from here.
Since the last one year, since I have purchased, the small cap gave a run-up of roughly 115%. Out
of this, I was able to capture roughly 90%. If a snapshot over, I will attach it here also, that
how I was able to capture 90% of this. And since then, small caps have corrected a little bit,
but not a big deal. For this, you need to take a slightly long term view. Let me share that also.
Let's look at from pre-COVID levels, and the total run-up is 230, 240. Now, typically speaking,
the return mathematics is that if you're looking at large gaps, so just like Nifty50 are large
gaps. So this may approximate, yearly return is 12.5% If you look at the small cap mid gaps, it
has been fairly bullish. So for last four years, we have made how much? Approximately 250%. Okay,
so. Now what has happened pre-2020 is if you look at the small cap index pace from 2017
all the way till 2020, they had actually come down. So up your sorry return mathematics if
you put and try to compile and understand what you will figure out. In this zone, the small cap
mid-caps had fallen. In this zone from 2020 to 2024, very good run up. So this return A,
return B, if you do the mathematics, It comes out to be fairly average returns. I would say
that it would be around 24, 25% CAGR. Here we are at best fairly valued. And overall,
the market risk right now looks little bit high, especially from India's investing viewpoint. Now,
what do I mean by India investing viewpoint? This is a video that I had done earlier.
Please go and check it out. On this video, I had explained how do these stock prices move
in India. Basically, in the last four years, what has happened is that FIIs have sold
the Indian market, and DIIs, which are domestic institutional investors,
they have bought the Indian market. They typically buy a lot of mid-cap and small-cap
companies. Because they have pension money to handle and a bunch of other different things,
they look for slightly lower risk investments because for them, going to India itself is
a slightly higher risk or emerging market proposition. So they typically hedge their
portfolios and all that. So they primarily deal with large-cap stocks, futures and options.
So that they can hedge their portfolio. Because for them, India is just a small market in their
entire portfolio game. So they look for slightly lower risk, but still high growth options. Diis
look for extremely high risk or high reward options, so to say. And in the last four years,
the SIP market has gone up like crazy. So a lot of money has flown into SIPs, and a big chunk of that
money has moved into mid-cap and small-cap. So right now, I'm not saying that from here.
Let me pull up that chart again because this is a very important points. For example, if we go here,
this is the small cap chart. I'm not saying that this entire gain will be wiped out. Maybe it will
now consolidate, it will go up, down, and all that stuff. At least for a few months or a few years,
maybe there can be a consolidation in this space. So this looks a little bit risky.
There is no massive reward that I'm expecting by holding a lot of positions in small cap indices,
per se. So therefore, I'm cutting it. I'm cutting my small cap position. So this is
the first major change that I'm making onto my portfolio. Now, what is it next that I'm doing?
So by picking up this money, I'm looking for some mid-cap to large-cap opportunities. A very good
case study would be something like CAMPs. So I'm going to tell you about CAMPs. If you do
fundamental analysis of CAMPs, what you will find is this.. Cdsl ,Cams, two of them. And
you can see that it went all the way from it. My community has benefited from it. My
students have benefited from it because this is one of the stocks on which I had given.
Made lot of 80-90% returns and you can see that it went all the way from 2000 to roughly 4000.
So now it is correcting a little bit. So let me just show that to you on charts. What do I mean?
For example, here you will see. So from its peak, it has corrected by 15%. Now, this is a dip that
is there. So a natural question to ask is that, Hey, is this a dip or can it correct further?
So for this, this is This is a channel. Maybe it will correct till here, and then maybe it
will bounce back or it might get broken down. If we do the industry-level analysis, then we have
to understand in which category, CAMS, CDSL type of companies operate. They operate in what? They
operate in stock market. If the stock market is typically going up or if the stock market
is even going sideways, I don't think companies like CAMHS, CDSL, get hurt. They get really hurt
when the stock market is going down. Now, what happened is that in India, the entire Sebi issue
is blowing up. Now, this has become a political war. If the stock market has gone down, if the
30% correction has gone down, then Congress will say, Look, we're doing this shit, all that stuff.
And what the government will say, You know what? Stock
market is not falling. We have managed the stock market. So since the stock market is not falling,
there is no scam. So stock market returns have now become an ego issue and a political
issue between the two parties. So what I feel or my prognosis as an investor is,
market can be taken sideways. There is unlikely to be a very deep correction in the
market. When I say deep correction, it means more than 20% correction in the stock market, which can
be sustained. Now sustained means that the market is going to be 20%. Now, It is just hanging there
only for maybe one, two years. So I don't think if you are keeping a three-year viewpoint, there
is any reason to panic on stocks like CAMS, CDSL types of stock. So I'm still aggregating them,
and I'm trying to buy them at dips. So this is one block that I have already invested. In
case you guys are interested in learning more about fundamental analysis, getting quick time
updates from my side, you can do two things. One is that you can join the member community.
That is very important. I give very quick updates there. If you're someone who is new, who is not
confident about investing in the stock market, I run live courses. Feedback has been excellent.
Here are some LinkedIn posts you yourself can go and check. These are genuine posts. You go
and speak with those people. They have attended my course. They have really benefited from it.
I teach everything from scratch. In case you're interested, there is a live batch coming up. You
can check the links in the description and comment box. My batches usually get full within a week of
launching. So in case you're interested, do sign up quickly. The primary advantage of this course
is the completion rate of online courses is less than 5%. That is what the MOOCs,
massive online open course data tells us. But for my courses, it is more than 95%. It is not
by default, it is by design. That because I have turned this into a live course, you get to engage,
interact. Therefore, the completion rate is very high. Therefore, you actually get
value out of the course. Anyways, coming back, I hope that this concept of CAMs is also clear.
Then comes another natural question that, okay, what about stocks like Aavas? Because they are
also small cap. You had earlier purchased it. Are you exiting your position? What
is it that you're doing? It's a very quick commentary there also. See, guys, basically,
Aavas is still available at a discount, one could argue. For example, this is your 200-day
moving average. It's not as if you are buying very crazy right now. That's one. Second is that this
is a lower-risk Why? I'll help you understand that point also. See, first and foremost, the revenues,
profits of company is all time high. There is no issue with revenues, profit of the company. Second
key point is that if you look at the business of Aavas, what is it into? So you can see it is into
housing finance. Housing finance is what happens? That people take a loan for their house. And
if the interest rates are low, they will pick more loans. If they take more loans,
then the revenue of the company is likely to grow. So in what type of environment or what
type of business cycle will Aavas benefit? Well, it will benefit when the interest rates go lower.
When are interest rates likely to go lower? Well, in the next three to four months,
US is almost given, is going to cut its interest rate now. Why? Because the inflation data in the
US has now come at a not historical all time low, but very recent all time low. So from that note,
it is almost given. Almost every single economist is now predicting that US is
going to do an interest rate cut. If they do interest rate cut, what will India do?
India is also likely to cut its interest rate. And if India cuts interest rate,
then companies like Aavas is going to benefit. Which other companies are going to benefit? For
example, Bajaj Finance, I'm going to tell you technicals. For example, if you check, the stock
was in a downtrend here, and this is from 2021. This is when actually the entire stock market
corrected between 2021 mid to 2023 mid. So that was a correction time. Stock hasn't moved from
this level to this, this. It's almost how many years gone? Almost three years gone. 0% return
on the stock.. Now, you'll say, you know what? Jio is going to eat business into Bajaj Finance.
Jio is going to eat business into Bajaj Finance. Now, that does not mean that you
stop buying companies that are competing with Jio. Now, Jio will compete with EMC companies
also. Jio might compete on insurance also. Jio might compete with CAMPs also. Who knows?
So Jio is going to eat all. Now, that does not mean that this will happen by next year. So this
will take time. What one could potentially do is that have some geo also. I also I have geo on my
portfolio. And I also have Bajaj Finance. Why? Because Bajaj Finance is at a good level right
now. It's not as if that you're buying this stock really expensive. And with interest rate cuts,
what is going to happen? Well, the consumer lending space is going to improve. Consumer
lending space, for the last few months, maybe like 8, 10 months, RBI has been very active. All that
stuff. But I think that regulatory pressure is going to ease. Interest rates are going to get
cut. The moment that happens, this lending space is going to pick up. Consumer loans are going to
pick up. I had been speaking about two themes in the last five, six months on my YouTube channel.
For example, one stock that I discussed was TCS.. It has already gone up. It has
already gone up by 17, 18%. Open videos, you go and check my old videos. I had spoken about
TCS. If you have actually benefited from it, do share your comment because they start trolling
unnecessarily. They have all the things to say in the world. So this is already going up. Again,
this is a candidate that will benefit by interest rate cut. This was one. Consumer durables,
Voltas and Whirlpool were two of my picks. They have done exceptionally well in the last six
odd months. Go and check the data again. Those have done exceptionally well. Why? Because that
interest rate cut is already getting factored into the market. Now, what are some high-risk stocks
that you should be avoiding? See, first of the things is that, in these stocks, there's a pump
and dump. Never touch those stocks because time is going to be really
tough on these types of stocks going forward. For example, this looks like a pump and dump. I
made that entire video. You can again go and check it. And then later, inquiry and it got evolved.
So see, this was very renewable. All the way till 2,734. It makes no sense. And now if someone is
buying it here, all I can say is that that was just a very bad investment move. See,
these type of stocks, I'm sure that people who listen to me,
they will anyways avoid. So this is not a challenge. The challenge is to avoid good
companies when they have become or it looks like that they have become overvalued. Now for this,
I'll tell you very quick Zomato story. See, if we look at from IPO level, I had purchased
Zomato at around 60. A lot of people who watch my videos might have done the same. I don't know. So,
from 60 to 260 almost four times. Now I've got my position, almost 70, 75% of it. Why? Think about
it. Who are the peers of Zomato? Swiggy. What is the valuation of Swiggy in unlisted space? Well,
it's between 11 to 13 billion dollars is the valuation that you are getting for Swiggy,
which is a competitor company of Zomato. What is the valuation of Zomato? If you compare the
number for this, the valuation of Zomato comes out to be roughly $23, $24 billion.
Swiggy is available at 60% price of Zomato. Now I understand that Zomato might It has slightly
better. It has made some very good business moves, whatnot, but almost double valuation. Does it make
sense? To me, it doesn't. I have rotated my money from Zomato to Swiggy. In case you guys want to
know how to do that, tomorrow I will write a post on my member community, help you understand the
challenges, how to do that in the unlisted space. So these are all the points that I'm executing.
The very quick macro picture is that over the next few months, and maybe over the next few years,
there is a very high chance of a time correction in the market. The market. You have to make
your returns. What do I mean by making your returns? You have to study the stock, study the
fundamentals, do not buy overvalued things, have patience, have patience on good stuff for it to
run. If you're buying something undervalued, hold it. It's fine. It's not end of the world. Hdfc,
it's not going to be a year, it's not going to be a year, it will stop giving run up.
It is probably one of the deepest undervalued stocks right now. I ask my return. Whenever
they run, they are so fast, that you will not be able to catch it. You can only catch a good
stock as a fundamental investor when it is down. When a stock has run up, now you are getting the
money to invest. At 260, it will be very difficult for anyone to make good returns from a stock like
Zomato if you're buying it now. You always make money by buying undervalued and then cutting your
position or reducing your position or selling your entire stake when things look overvalued compared
to its peers. That's a simple phenomenon. Again, I teach all these fundamentals on my stock market
course. In case you guys are interested, you can join. Thank you so much for watching. I hope you
enjoyed it. You learned something new. If you did, do press a like button and I'll see you soon.
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