Stalwart Advisors

Exit Note

We had entered Coromandel as a contrarian bet in mid 2016 after two successive monsoon failures. The sector experienced a positive cycle over last 2.5 years on the back of adequate monsoons and improving agricultural activity which led to higher capacity utilisation and operating leverage.

We are exiting this position with a 83% return over the holding period primarily led by earnings growth. We plan to deploy the released capital in opportunities with better risk-reward.


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Exact weightage will depend on each subscriber’s risk appetite & comfort. However, as a thumb rule, any position size under 3% is little insignificant to move returns at portfolio level whereas beyond 10% it gets riskier from a concentration standpoint. Accordingly, low could indicate 3-4% weightage, medium 5-7% and high 8-10%.
Structural are those portfolio businesses where earnings are relatively stable (less volatility) and further are expected to rise in a steady fashion. Cyclicals are businesses which experience periods of upcycle followed by downcycle and have large variation in their reported earnings based on industry demand and supply. The mix between the two depends on available opportunities and respective valuation of the two pockets.