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Renuka sugar

When I started investing I am always afraid to put my money in the Midcap and small-cap stocks. people say that these stocks are high Beta( high volatility) but when I listen to famous investors’ interviews and their holding I found that they have only that type of stock Investing is a competitive field where without having an edge you can not beat market. As investors we always competitive advantage over companies but forgot to find our competitive advantage. therefore, I started investing in small companies because mutual funds and big FII are mostly away from these companies.

   First of all, I found the ethanol story where e big transformation happening because India is the highest importer of crude oil. i had read in Parag Parikh’s book that when the cycle goes in an uptrend market leader will do well but bottom companies who have large debt and low margins will go much higher than the market leader because they are capable to repay their debt and margins of small companies increase 5% to 10% easily but a market leader who has 20% is difficult to go 40%. These all things are hindsight because I had already believed that I had done a mistake to give the highest allocation to Renuka sugar. 

Now I can explain why:

    When I started buying Renuka who has the highest capacity of the distillery and almost (market cap= debt). The price of this stock is almost around 36 and within a few days with a 5% upper circuit goes to around 43. but after some time stocks goes to around less than 22. I believe that nobody has that much temperament to hold that stock or put more money. but I had done it not because I am a genius but when I have strong conviction in my heart then I follow with calculated risk. I have conviction because of promotor is good and allocation is increased over some time. therefore I put more money and average out to 32. The journey is not easy and I am lucky to get these returns(today 60+) otherwise not possible to handle for any newcomers.I still believe that stock will go down.

    Overall, I believe that finding edges over others is make you successful in investing because when you study companies that are already studied by everyone or held by everyone I don't think you will make money. I also believe that this type of risk with a small capital at an early age is easy to take but after some age and capital, you will be much more risk-averse. for example, if any deciding stock has 100% upside and 50% downside depending on your capital because if you have one cr. then you can't put but 20k to 30k is easy.

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