12/19/2016

16PotentialMultibaggerStocksSparkleInSamplePortfolioOfMotilalOswals21stWealthCreationStudy

Rakesh Jhunjhunwala
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16 Potential Multibagger Stocks Sparkle In

Sample Portfolio Of Motilal Oswals 21st
Wealth Creation Study
Dec18th
2016

WrittenbyArjun

2Comments

RaamdeoAgrawalandhisaceteamatMotilalOswalneverdisappointnovice
investors.Inhislatest21stWealthCreationStudy,Raamdeohasnotonlytutoredus
onthetheoreticalaspectsoffindingmultibaggerstocksbuthasalsogivenusaready
madesampleportfolioof16topqualitystockstoplaywith

Inspiring story of rags to riches shows us the path

ItiswellknownthatRaamdeoAgrawalhasasoftspotfornoviceinvestors.
ThereasonforthisisbecauseRaamdeohimselfwas,untilsometimeago,a
strugglerinthestockmarketandknowsthetrialsandtribulationsthat
noviceinvestorsgothroughtomakeendsmeet.
Raamdeosrelentlesseffortscoupledwithabitofgoodlucktransformedhis

STOCKS TALK FORUM

Letsgetrichproveourselves
FriendsIamtiredofseeingusanalyze
stocksandtheseloosefocus.The
currentbloodbathhasleftmewondering
wherewewentwrong...whenIbegan
earnestlyinvestingImadesomereal
greatchoicesJKTyresLGBalakrishnan
BrothersHPCLetc.etc.TheNamorally
broughthope...butnowallthathas
fizzledoutstocksare[]
MyStocks
Dearfriends....Iamputtingheremy
interestedstocks....Unabletogivefull
analysisduetolackoftime.EXCUSE
Infosys
Respectedmembers,Iamnewtothis
groupandstockinvestingaswell.
Pleasehelpmeoutonmyquery.Ihave
85sharesofInfosys@Rs.998.110
SharesofHindusthanUnilever@Rs.
860Thishasbeenpurchasedovera
periodoftwomonthsi.eOctNov16.I
havealongterm[]

fortunesandcatapultedhimfromapovertystrickenexistenceintothe
ranksoftherichandfamous.

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16PotentialMultibaggerStocksSparkleInSamplePortfolioOfMotilalOswals21stWealthCreationStudy

Infact,Raamdeoisprobablyamongstthefirstofthesavvyinvestorsin
Indiatohavesnaredamagnificent100baggerstock(10,000%)gain.
Raamdeogenerouslyexplainedthetechniquesthatheadoptedtoachieve
theincrediblefeat.

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RaamdeosnetworthispresentlyaneyepoppingRs.2,700crorewhilethat
ofMr.MotilalOswal,hisbusinesspartner,isRs.2,800crore.
ThecollectivenetworthofRs.5,500crorehasbeenearnedbytheduofrom

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thesimpleexpedientofhominginonwinningstocksandholdingthemtight.
Wehaveseenareallifeexampleofhowtheduopicksfailproofstocksand
nurturesthemtilltheybecomemegamultibaggers.

RECENT POSTS
'Mr Raamdeo Agrawal's journey from 0 to 1000 Cr' - on CNBC Awaaz

16PotentialMultibaggerStocksSparkle
InSamplePortfolioOfMotilalOswals
21stWealthCreationStudy
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Stock:AdiGodrej
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FavStockOfVijayKedia&PrashantJain
BestStocksToBuyToProfitFrom
NAMOsNoteBandiCrises
HowToFindMegaMultibaggerStocks:
RidhamDesaiRevealsSecretMantras

RECENT COMMENTS

Hefty gains from stocks recommended in previous

Wealth Creation Studies
OneofRaamdeosendearingcharacteristicsisthathedoesnotrestcontent
withexplainingtheoreticalaspectsofwealthcreation.Instead,heprovides
tangibleexamplesofreallifestockstoprovehispoint.

Arjunon16PotentialMultibaggerStocks
SparkleInSamplePortfolioOfMotilal
Oswals21stWealthCreationStudy
Dman1981on16PotentialMultibagger
StocksSparkleInSamplePortfolioOf
MotilalOswals21stWealthCreation
Study
AvanishonSaurabhMukherjeasLatest
BookTheUnusualBillionairesReveals
TopSecretsOnHowToFindMultibagger
Stocks
VenkyonSanjoyBhattacharyyaPutsA
BuyOnFavStockOfVijayKedia&
PrashantJain
KondalonBestStocksToBuyToProfit
FromNAMOsNoteBandiCrises

TounderstandthepotencyofRaamdeosstockpickingability,wehaveto
checktheperformanceofthestocksrecommendedinthe18thWealth
CreationStudyandthe19thWealthCreationStudy.
TheperformanceofthestocksonaYoYbasisandonatwoyearbasisisas
follows:
GainsFromStocksChosenIn18thMotilalOswalWealthCreation
Study
Stock

CMP(Rs)

YoY(%)

2Year(%)

Symphony

1227

14

41

BajajFinserv

2822

46

114

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16PotentialMultibaggerStocksSparkleInSamplePortfolioOfMotilalOswals21stWealthCreationStudy

BajajCorp

360

(14)

ZydusWellness

856

12

CairnIndia

256

95

Averagegains

29

35

BacktoTop

GainsFromStocksChosenIn19thMotilalOswalWealthCreation
Study
Stock

CMP(Rs)

YoY(%)

2Year(%)

AartiDrugs

655

22

70

SuvenLifescience

176

(30)

(20)

GranulesIndia

116

(23)

60

DCBBank

108

41

TataElxsi

1446

(34)

154

ShilpaMedicare

731

57

165

AtulAuto

420

(18)

(30)

Averagegains

57

Asonecansee,theperformanceofthestocksonatwoyearbasisisquite
laudablegiventhedifficultstateofthemarkets.Onanaveragebasis,the
modelportfolioshavegiventwoyearreturnswhichhavebeatenthe
benchmarkindicesbyawidemargin.

21st Wealth Creation Study Focused Investing

Inthe21stWealthCreationStudy,Raamdeoandhisaceteamhavedilated
ontheimportanceoffocusedinvestingandthepowerofallocationinwealth
creation.
Thestudyexplainsindetailthatwhileinvestorspayalotofattentionto
stockselection,theydonotpayasmuchattentiontostockallocation.
Theresultisthateventhoughinvestorsdohomeinonmultibaggerstocks,
theyareunabletobecomeimmenselyrichbecausethepercentageof
capitalallocatedtothestockisverymeager.

Mr. Raamdeo Agrawal on the 21st Wealth Creation Study on CNBC A...

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Four keys to successful Focused Investing

Thestudyexplainsthattherearefourkeystoachievingthegoalof
successfulfocusedinvesting.Theseare:
1.Clearportfoliogoal,
2.Superiorstockselection,
3.Rationalallocation,and
4.Activemonitoringandimprovement.
Whilepoints1and4areselfexplanatory,theaspectofsuperiorstock
selectionisachievedbyfindingstocksthatmeetthecriteriaencompassed
intheacronymQGLPwhichstandsfor:
QQualityofbusinessandQualityofmanagement,
GGrowthinearnings,
LLongevityofQuality&Growth,and
PfavorablePriceofpurchase.
BuyingastockwhichfulfilstheQGLPcriteriaisasurewayoffinding
multibaggerstocksistheconfidentassuranceofRaamdeoandhisteam.

Adopt Confidence-Adjusted Payoff formula to

avoid misallocation
Theaspectofallocationofcapitaltothestockisanareawheremostnovice
investorsgoofupbecausewecanneverbesurehowmuchisenough.
Toresolvetheissue,RaamdeohasformulatedanewformulacalledtheCAP
(ConfidenceAdjustedPayoff).
TheCAPframeworkwasactuallyimplementedbyWarren
BuffettwhilstmanagingtheportfolioatBuffettPartnershipsduringthe
1960s.
WarrenBuffettsgoldenwordsprovideanaptdescriptionoftheCAP
framework:
Thequestionalwaysis,HowmuchdoIputinnumberone(rankedby
expectationofrelativeperformance)andhowmuchdoIputinnumber
eight?

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16PotentialMultibaggerStocksSparkleInSamplePortfolioOfMotilalOswals21stWealthCreationStudy

RaamdeohastakenWarrenBuffettsadvicetoitslogicalconclusionand
brokendownthestepsforCAPbasedallocationintothefollowing:
Rankalltheselectedstocksindescendingorderoftheirexpected3or5
yearupside.

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Tothisupside,applyaConfidencefactorrangefrom0to100%.Themain
ideabehindtheConfidencefactoristodeflatetheexpectedupsideforrisks
thatmaynothavebeenexplicitlycapturedintheupsidecalculations.(Note:
IftheConfidencefactorisverylow,perhapstheveryselectionmayneedto
bequestioned.)
Foreachstock,arriveatConfidenceAdjustedPayoff(CAP)i.e.Upsidex
Confidencefactor.
RankthestocksindescendingorderofCAP,andalignthefinalallocation.
ThemoreaccuratetheassessmentofCAP,thehigherwillbetheportfolio
performancebasedonthisallocation,ratherthananyother(e.g.equal
weight),theStudysays.
Itisaddedthatadditionalnormscanbeincludedsuchas:
nothavinganystockwithallocationmorethan10%oftheportfoliovalue
nothavinganystockwithallocationlessthan3%oftheportfoliovalue
nothavingmorethan5%equityofanycompany

Will Recommend Concentrated Investment Strategy: Motilal Oswal

Sample Portfolio of 16 top-quality stocks

RaamdeoAgrawalknowsbetterthananyoneelsethatnoviceinvestorshave
alowthresholdfortheoreticaldiscussion.Therehastobeahealthybalance
oftheorywithpracticalexamplestoretaininvestorsinterest.

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16PotentialMultibaggerStocksSparkleInSamplePortfolioOfMotilalOswals21stWealthCreationStudy

Withthisnobleobjectiveinmind,the21stWealthCreationStudyhas
providedasampleportfolioof16topqualitystocks.Thestocksarefirst
alignedinaccordancewiththeir3yearupsidepotentialandtheconfidence
factor.Incaseswheretheconfidencefactorfactorislow,reasonsaregiven
forthat.

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(Clickforlargerimage)
Thereafter,thecapitalisallocatedtothestockdependingontheconfidence
factor.

(Clickforlargerimage)
Forexample,thereis90%confidencethatIndusIndBankhasa3year
upsideof31%.TheConfidenceAdjustedPayoffisworkedoutat28%and
sothestockcanbegivenanallocationof9%intheportfolio.
Similarly,EicherMotorsisexpectedtohavea3yearupsideof22%andis
givenanallocationof6%ofthefundsintheportfolio.
Incontrast,thoughInterglobeAviationhasa3yearupsidepotentialof
27%,theconfidencefactorislowat70%giventherisksintheindustry.

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16PotentialMultibaggerStocksSparkleInSamplePortfolioOfMotilalOswals21stWealthCreationStudy

Theresultisthatthestockcannotbetrustedwithanallocationofmore
than4%oftheportfolio.

Conclusion

BacktoTop

The21stWealthCreationStudythrowslightontheimportanceofcapital
allocation,anaspectthathasbeenlostsightofsofar.TheStudyalso
providesaframeworkthatenablesustodecideinanobjectivemannerhow
muchallocationisappropriatetoeachstock.Thereisnodoubtthatthe
Studywillhelpushomeinonmultibaggerstocksandtoprofitfromthemin
ameaningfulmanner!
ClickheretodownloadMotilalOswals21stWealthCreationStudy

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2 Comments

Dman1981

December18,2016at10:19pm|Permalink

Suvenlifesciencesis2822Rs.Wishifitwas.
Reply

Arjun

December18,2016at10:37pm|Permalink

Correctednow.
Reply

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