Indian Net Net Stocks for June 2022
A monthly list of Indian Net Net stocks for a strategy that has consistently outperformed the market
This is part of the Indian Net Net Stock Portfolio strategy that is discussed in depth here. Please read that first to be armed with the full-context behind the following Indian Net Net stocks for June 2022.
A Performance Review of May 2022
An equally-weighted portfolio of May 2022 Indian Net Net stock picks returned -17.18% in June 2022:
The BSE500 Total Return Index returned -4.16% in May 2022:
Thus, the Indian Net Net Stock Portfolio for May 2022 underperformed the BSE500 Total Return Index by -13.03%.
Indian Net Net Stocks for June 2022
For June 2022, there are 2 new net net stocks compared with May 2022:
June 2022’s Net Net stocks include:
Manaksia Ltd
Sicagen India Ltd
There has been turnover of 2 stocks that were in the May 2022 Indian Net Net stocks portfolio:
Riddhi Siddhi Gluco Biols Ltd
Trejhara Solutions Ltd
The Indian Net Net strategy spits out a collection of net net stocks every month to invest in, with equal allocation. One should remain invested in those stocks so long as those stocks are in the monthly lists. If a stock is removed from the monthly list, then it is the signal to sell that stock.
Please the read the following 2 sections about long term expectations and nuances to invest responsibly with good risk management:
A Reminder of the Long Term Expectations of Indian Net Net Investing Strategy
An average annualized return of +43.69% and average annualized outperformance of +24.34% over the BSE500 Total Return Index, at a high IR of 0.67 shows consistent outperformance of the strategy.
A Reminder of the Nuances of Indian Net Net Investing
Net net investing is more of a portfolio strategy, rather than a strategy where you select individual stock winners. It is harder to confidently say that a single net net stock will generate good returns. But it is easier to have confidence that a diversified collection of such net net stocks will do well.
The problem is that in this strategy applied to the Indian market, you only have 6 net net stocks on average that make it into the monthly list. This leads to quite a concentrated portfolio! Hence, I suggest having an upper limit to how much money you are comfortable allocating to Indian Net Nets. It would not be wise for example, to have your entire retirement savings allocated to such a concentrated group of 6 stocks!
Look at this time-series of the Indian Net Net Portfolio’s monthly returns:
Note: The above chart is not updated for June 2022, but the average monthly return is updated
This shows that overall, there are periods of big returns, with an average monthly return of +3.01%. However, to really succeed, patience is required to tolerate consecutive months of negative returns, without deviating from the strategy.
Also, when buying or selling these net net stocks, it is critically important to use limit-orders, rather than buy at market prices with market orders. This is because the liquidity on these stocks are usually lower, so buying with market orders will usually increase your purchase cost significantly.
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Best,
Raj Arishtocrat from SEE ACT WIN
Disclosure:
Solutions must fit the circumstances and conditions present in the goal or problem. Without knowing these circumstances and conditions, it is impossible to prescribe a specific solution! This is a general principle.
I do not know my readers’ circumstances or conditions present in their financial goals or problems. Hence, I cannot prescribe or recommend any specific solution. Therefore, please view what I write about as research that I am sharing with you, for you to consider in your own decision making.