Well-diversified, relatively low-risk portfolio

Key Attributes

Inception Date: 23 Nov 2009

Number of Stocks: 40-60

Founder, MD, and Portfolio Manager: Dr Rajesh Kothari

Portfolio Manager's Experience: Total Exp – 20 Years, Founded AAA in 2009

Portfolio Manager's Qualification: CWA and an MBA

Investment Objective

The objective of this strategy is to invest in listed companies with a combination of high growth stocks as well as value stocks. The primary focus is on capital protection with an aim to deliver attractive long term returns using disciplined, fundamental, research-driven approach.

Portfolio Strategy

Investment Universe

• Diversification across industries
• Diversification across M-cap with focus on liquidity:

   • Min 40% in large cap INR275 bn+
   • Not more than 10% in one stock
   • Max 35% in one sector
   • Max 50% in the top 10 stocks
• Minimum investments in 30 stocks

Flexible investment style: Growth as well as Value with focus on Margin of Safety

Staggered Approach

• Portfolio exposure increased over a period
• Not averse to raise cash

Exit Strategy

• Close eye on earnings growth drivers
• Close eye on valuations

• Continuous monitoring of risk

3M Stock Selection Approach

• Market Size– Size of the opportunity should be huge to generate significant investment returns

• Market Share– The company be consistently profitable and should be among the leading players in the industry

• Margin of Safety– The company should provide reasonable growth opportunity at reasonable Margin of Safety

Investment Process

  1. Stock Identification

• Identify emerging trends and opportunities from a universe of 600 companies
• Filter approach – using variety of valuation parameters
• Focus on earnings, free cash flow, ROE, long term growth and profitability trends

 

  1. Analysis & Decision making Process

• Initial screening
• Corporate meeting and detailed due diligence
• Identify sustainable competitive advantage

 

  1. Portfolio Construction Monitoring & Nurturing

• Combination of Top Down and Bottom Up approach with a benchmark agnostic strategy to achieve Long term investment objective
• Continuous portfolio monitoring ensures prudent risk management
• Regular interaction to provide strategic inputs to strengthen systems, controls and CG in line with best practices

 

  1. Exiting & Realizing Value

• Constant evaluation of valuation metrics to decide optimum return potential
• Intrinsic value V/s Current Market Price to evaluate Margin of Safety
• Change in underlying assumptions of investment thesis.

QUALITY, RISK, CONSISTENCY ANALYSIS

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