I have had love affairs with Gujarat gas, concor, asian paints, Blue star etc in the past. The original thesis when investing in these stocks played out and the final results were far better than what I had expected.
Then like all affairs, it was time to part. A few of these stocks got overvalued and I moved on.

Now unlike old girlfriends, there is no harm in revisiting these old relationships from time to time. You know the company, its management well and if you  held it for a long time, then you would have become comfortable with the business too. So I tend to track these old flames regularly and if I find them to be attractive again, I will go ahead and invest again in them.

They key point when investing in the same stocks again is to avoid becoming emotional with these stocks which have treated you well in the past. It is important to analyse these companies as if you are analysing a new stock and check the price value relationship. If there is a substaintial gap, then I am fairly comfortable re-investing again.

Case in point : Gujarat gas. I sold off this stock by end of  2006 thinking that the stock was overvalued, after having held the stock for 3 years. Then last year on checking the fundamentals, I realised some of the risk in terms of gas pricing had been handled pretty well by the company. In addition the company has expanded its area of operations further and is doing very well. With the current spike in fuel prices, I think the company should do well for the next few years. 

So no harm in revisiting these old flames from time to time and re-starting the old relationships again. Ofcourse I mean stocks and not girlfriends 🙂 . Now this is one post my wife should not read (she hardly reads them anyway, so I am safe I guess).

One Comment

  1. anonymous says:

    gujarat gas is into retailing of gas. so how will the fuel price hikes help the company do better? it does not produce gas itself ?

    I have never understood which companies actually benefit resp. loose from fuel price hikes. is it correct that the companies which actually “produce” or “drill” fuel benefit and the government owned companies involved in retail loose a lot? it would help if you can clarify.

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