As markets turned down from bull to bear after the 2018 budgets, along with good stocks that gave up in price to adjust for extended valuations, there were some big names that have collapsed in price.
Here is the list of top 30 wealth destroyers of 2018-19.
It is sad to see that stocks have lost about 67 to 98% of their price in just 1 year. Among them here are some very poor quality names that had shady or unethical promoters like the Reliance Adag group, DHFL, McLeod Etc. Promoters who took advantage of their corporate presence to grow personal wealth. In some places greed made them use liquid assets to own illiquid assets, which turned out a nightmare to them when they had the need to repay the borrowings that they created pledging shares of their companies.
DHFL, Yes Bank CG Power, Coffee Day, McLeod, most of them bet their greed on real estate and lost badly. Poor corporate governance got added to their greed. We have some very prominent names like Yes Bank losing almost 85%.
It is said in the markets that, when a stock loses 20% in a very short span, chances of the stock getting back to normal is bleak. Here we have stocks giving away more than 65%, which means all of these stocks have kind of completed their life cycle.
Among the above names we did have exposure to some of them in their hay days like Graphite, HEG, IBull Ventures and even DHFL. In all of these exposures we have booked minimum 100 to 300% profits.
On hindsight, when we look back, it is the process that helped us get the best out of any stock that we invested. For example, DHFL, we picked it at 340 levels when the company was giving out good results. Trend continued pushing the stock to 680 levels from where it turned down. When this down side happens, results had kind of showed slowdown in growth. DHFL moved out of our ranking tables and triggered exit for us.
We did not exit at the top, while got out at 642 levels, almost pocketing 100% in 10 months.
In Graphite we had an early entry, we picked up at 155 levels, stayed invested for more than 18 months. Graphite has a continuous rally in price without any tiredness.
Earnings too supported with robust growth, by 4th quarter of FY18, it showed tiredness, we had exit signal at 900 levels. At that time SEBI and Exchanges played havoc in the markets. Both re-categorisation and Additional Surveillance Margins killed the stock price. It had continuous down freezes which gave us exit only at 643. Yet we made a little more than 300% in this stock, while had the opportunity to book 500%.
The learning at that time was, even a good stock can get hammered when regulators step in. Had to accept the gains left for us and not worry about that which is lost.
Now after a year since we had exited most of these positions, there is an even big learning. Come what may, follow your rules, you will be saved always. Today we own none of these stocks. Feels proud when we see the prices, on the hindsight mind thinks, we have made good a big chunk of profits from these stocks which today seems nowhere close to them.
For those who have a strategy, follow it divinely, profits are available in loads.