Oracle on 🔥

How can’t I not brag about this one! I believe I picked this up exactly one year ago, in January 2023 at just below 3000 and slowly built up through the year. And what a move it has been! Up from around 4500 to over ₹7000/- in three days! This has been the fastest doubler of my career and I am so very proud of myself 😋

It was a pretty easy stock pick to be honest. It had a fantastic dividend yield of then over 6% with one of the lowest P/E of around 15 at around 3000-3500 levels and had nothing wrong with it. Its parent is the global giant Oracle corp, does fantastic recurring revenue business of selling banking software to large banks which throws in annual payments with no incremental costs and most importantly, the stock had done nothing for almost 10 years.

I believe I have hit the sweet spot in my journey. Once a stock which gets derated spends enough time doing nothing and tires people off; shows multiple false breakouts and then goes down again; increases its profitability and thereby its dividend yield over time and has irritated its investors so much that people aren’t willing to buy at any price is the perfect time to get in.

It sounds very easy but is extremely gruelling and nerve wrecking to stand against the cumulative wisdom of the crowds. It wasn’t easy to buy ITC in 2021 June when it refused to move above 220 for ages; it was horrifying to add to Tata Motors all the way down from 430 in January 2018 to 60₹ in 2020 covid lows and it was excruciating to keep adding BSE when for three years in August 2018- August 2018, the absolute return was zero!

So everything looks great in the hindsight but if it actually was so easy, everybody would be rich!

Investing is simple but not easy. You have to hold on to your convictions against the price action, for years together. The company might do everything right but the market just doesn’t recognise it or worse, refuses to even acknowledge. It on the other hand keeps taking less brilliant companies to fuzzy heights and everybody thinks you are nuts holding to a dumb stock.

Well, the true test of the investor is in these times. Except OFSS, every multi-bagger which I have took off in the fourth year of holding when it gave me zero to negative 40% in the first three! So I don’t even worry if the stock doesn’t move for a year or two. I just don’t like the idea of selling out on price action as that’s the cardinal sin of long term investing.

I only have one regret of not building up the position of OFSS double the one I currently have. Well, that’s the problem of investing. Your ideas are more than the money you can put in. And your top three positions will always invariably be added more because they’re there for a reason. I am however sure that the rally in OFSS is exactly about the low float plus low ownership which I had elaborated in a previous blog about how BSE was benefitting from such a move.

In case of OFSS, there’s hardly any share available in the market and thus the scarcity premium is working to our maximum advantage. It alaways happen the same way. It still remains cheap compared to its peers and with a profit jump of 70%, it’s expected dividend will top ₹250-270 this year and that’s a four per cent yield even now! At an EPS of around 270, it’s still trading at 25x almost trailing earnings and with its growth rate, remains a fantastic buy. The leader of the COVID tech bull run was Tata Elxsi and LTI; OFSS might do the same this time! And if the PE are rating does happen, you can’t rule out a 60-80x multiple or a ₹17000-20000₹ stock price! Who knows!

PS- I now believe that the erstwhile dear ones like the HDFC-Kotak-BajajFin and Asian Paints-Berger are going to go through the decade of no return period. People are going to be so tired of holding that maybe in three years, I’d be writing a post about how I’m adding Asian paints to my portfolio!