Concentrated portfolio
- Portfolio on average comprises 20–25 stocks
- The aim is to generate a 20%+ CAGR for the portfolio over a minimum holding period of 3+ years at any point of time
- Sector and market cap-agnostic investing approach with bias towards under researched and well-run small to mid cap companies
Allocation flexibility
- No hard cap on contribution of portfolio from any idea or sector or market cap range, but prudence to be maintained Weight per stock may range from 3% to 5% @cost; exceptional opportunities may get an allocation of 10% @cost
- Decision to exit investments will solely be based on their business performance or their potential incremental IRR
- Will keep portion of portfolio in cash equivalents if valuations of existing holdings and watch list become exorbitant
Portfolio tracking
- Track industry trends of portfolio companies like changes in competitive landscape, technology, regulations, supply chains, etc
- Evaluate quarterly results of each company against own expectation & benchmark performance against that of competitors
- Carry out detailed diligence in case the investment’s performance is not as per initial investment hypothesis
Portfolio rebalancing
- Exit an investment if either its valuations become absurdly expensive or it there is a structural challenge to its business fundamentals
- Periodically rank portfolio companies based on valuations, earnings performance, expected future stock returns, and rebalance accordingly
- Fresh or follow on investment in an idea only if it can deliver an attractive IRR over a period of next 3 years
Sources of Idea Generation
- BSE corporate announcements
- Press releases, investor presentations
- M&A deal/Joint venture/Partnership agreements
- Quarterly results – watch out for breakout post a big earnings surprise (PEAD)
- Conference calls (Trendlyne, AlphaStreet, ResearchBytes, Company website IR section)
- Global peers commentary and outlook
- Management interviews
- Screeners (Tijori Finance, Screener.in) – big capex, 52-week/all-time/post IPO new high
- Equity research reports (Ambit, ICICI Securities, Spark Capital, IIFL, Nirmal Bang, Axis)
- Annual reports, credit rating reports, DRHPs, QIP Offering Documents
- Investor letters (Solidarity, SageOne, Equirus), Investing conclaves (TIA, IIC) and webinars
- Fund managers’ top 5 holdings from PMS Bazaar website
- Bulk deals+block deals+insider buying (StockEdge), 52-week high volume list
- Magazines/Newspapers/Industry-specific websites
- Discussions with peers and colleagues; views of the leading analysts of individual sectors
- Social media (Twitter, WhatsApp, Telegram) and online forums like ValuePickr, Multipie