ALCHEMY High Growth Select Stock

• Concentrating on top choices from the Alchemy team’s well-regarded bottom-up stock-picking abilities certainly looks like an intriguing high-risk, high-reward strategy. A flexible strategy enables the fund manager to switch between investing philosophies and market capitalisation in accordance with the greatest prospects.
• The investing team, ideology, and process are stable since they have a seasoned and well-respected co-founder. CIO and fund manager have extensive equities investment experience.
• High expansion Long-term performance of a particular stock was also strong, and it was able to maintain a position in the top 1 or 3 quartiles. However, recent years’ underperformance has reduced the favourable trailing return. This recent underperformance is not something we consider to be systemic. We favour Alchemy’s multicap-focused approach, particularly its selection of high-growth stocks.
• India is one of the nations with the quickest economic growth. It has the entrepreneurial reserves to take advantage of chances by using a “Top-Down” and “Bottom-Up” strategy to stock selection with an emphasis on superior risk-reward.
• A typical portfolio consists of 8–12 stocks from several industries; one stock exposure is limited to no more than 25% at cost.

With a mid-cap bias, long-term returns will be generated by investing in equities and equity-related instruments across all market capitalisations.

• Appropriate for an investor looking to participate in India’s growth story through equities.
• Long-term investment horizon: 3 to 5 years is an ideal investment horizon.
• High-risk, high-reward strategy.

The Alchemy High Growth Select Stock (AHGSS) strategy capitalises on Alchemy’s strengths in top-down and bottom-up research and stock selection. Alchemy’s investment team has a proven track record of finding winners over time. True characteristics of finding winners necessitate a thorough understanding of the business. The drivers of long-term sustainable performance in organisations can then be translated into long-term return performance.

It can affect the company’s entire growth cycle because we understand its business and value drivers. A long-term investment strategy allows us to benefit from profit growth and prospective business assessment re-rating, which may result in superior returns.

Markets are cyclical, oscillating over time between a bull, bear, and sideways/consolidated phases. While a well-diversified portfolio is necessary to capture a diverse range of businesses, excessive diversifying tends to dilute returns, except in a roaring bull market where the tide lifts all boats. However, markets frequently experience short periods of bull and bear cycles with long periods of sideways to consolidation in a range.

A concentrated portfolio allows investors to focus more on individual stock results and returns, limiting the correlation to broad market overall index returns over time.

In our experience, most large investors, such as UHNIs, Family Offices, and large allocators, already have broad market exposure through direct investing, allocation to MFs, and PMSs. As a result, allocating a portion of capital to a concentrated strategy makes perfect sense because the investor is already diversified, and a distinguishable strategy can generate additional differentiated returns.

1. Tracking Universe — Based on market capitalization (ideally over 4000 crores), qualitative governance criteria, long-term attractiveness, and company ROE profile, we established a tracking universe of roughly 400-425 firms.
2. Investible Universe – Based on past and future fundamental variables such as revenue and EBIDTA growth, cashflow conversion efficiency, and core ROE of the business, as well as several other relevant variables that may be unique to a business, an investible universe of companies, is created from this tracking universe. In addition to objective fundamental metrics and qualitative managerial competencies, governance norms and the business’s competitive capacity are assessed. A full valuation exercise is also performed using one or more valuation parameters, like to arrive at an appropriate value range for investing in the securities, use P/E, P/B, EV/EBIDTA, DCF, and other methods.
3. Portfolio Construction – the strategy’s Portfolio Manager is then free to build the Client’s Portfolio from the investible universe at his leisure.

Investment Objective
» To generate long-term returns by investing in equities and equity related instruments, across all market capitalizations with a mid cap bias
Strategy
» Invest in companies across the market capitalization range, which have high growth potential and potential to deliver long-term capital appreciation