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.
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
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
- 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
- Analysis & Decision making Process
• Initial screening
• Corporate meeting and detailed due diligence
• Identify sustainable competitive advantage
- 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
- 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.
