Concentrated Portfolio
- Portfolio typically includes 20–25 stocks
- Target: 20%+ CAGR over a minimum 3-year holding period
- Sector and market-cap agnostic approach
- Bias toward under-researched, high-quality small and mid-cap companies
Allocation Flexibility
- No rigid caps on sector, idea, or market cap exposure
- Typical stock weight: 3%–5% (at cost)
- Exceptional opportunities: up to 10% allocation
- Exit decisions based on:
- Business performance
- Future return potential (incremental IRR)
- Maintain cash equivalents when valuations appear excessive
Portfolio Tracking
- Monitor:
- Industry trends (competition, tech, regulation, supply chains)
- Evaluate:
- Quarterly results vs expectations
- Performance vs competitors
- Conduct deep analysis when:
- Investment thesis deviates
Portfolio Rebalancing
- Exit when:
- Valuations become irrational
- Structural business risks emerge
- Periodic ranking based on:
- Valuations
- Earnings performance
- Future return expectations
- New or additional investments only if:
- Strong 3-year IRR visibility
Sources of Idea Generation
- Corporate announcements (BSE)
- Press releases & investor presentations
- M&A activity, JVs, partnerships
- Quarterly earnings (focus on breakout surprises – PEAD)
- Conference calls (Trendlyne, AlphaStreet, ResearchBytes)
- Global peer insights
- Management interviews
- Stock screeners (Tijori Finance, Screener.in)
- Equity research reports (Ambit, ICICI Securities, etc.)
- Annual reports, DRHPs, credit rating reports
- Investor letters, webinars, conclaves
- PMS holdings data (PMS Bazaar)
- Bulk/block deals, insider activity (StockEdge)
- Media, industry publications
- Peer discussions and analyst opinions
- Social platforms & forums (ValuePickr, Multipie)
Multi-Pronged Approach for Idea Generation
Track Key Company Metrics
- Leadership in niche segments
- Low debt, high ROCE
- Strong revenue growth and operating leverage
Track Industry Developments
- Supply-side consolidation trends
- Regulatory changes
- Emerging adoption cycles
Track Investment Activity
- Institutional participation (PE, hedge funds, mutual funds)
- Renowned investors
- Insider buying trends
Track Corporate Events
- Promoter/management changes
- Demergers, mergers, arbitrage opportunities
- Major capex or product shifts
Portfolio Risk Approach
Four Key Risks in Investing
- Business Risk
- Management Risk
- Valuation Risk
- Industry Risk
Note: A business with poor governance has zero intrinsic value
Possible Investment Outcomes
- Big Profit
- Big Loss
- Small Profit
- Small Loss
Core principle:
Avoiding big losses is more important than chasing big gains.
Being wrong is fine. Staying wrong is costly.
Sources of Opportunities
Variant Perception
A differentiated view on a company’s short-to-medium-term trajectory
Key Triggers
- Product mix improvement (margin expansion)
- Operating leverage
- Industry cycle shifts
- Regulatory changes
- Working capital improvement
- Deleveraging
- Better asset utilization
Corporate Actions
- Demergers
- Reverse mergers
- Management changes
- Divestment of non-core businesses
Long-Term Structural Trends
- Strong industry tailwinds
- Predictable and consistent cash flows
- Long growth runway
- Value migration opportunities
Key Structural Themes in India
- CDMO / CRAMS / EMS
- Specialty chemicals
- Affordable housing
- FinTech
- Branded consumption
- Financialization of savings
- Digital transformation
- Cloud computing
What We Avoid in Portfolios
- Commodity/cyclical businesses at peak cycle
- Government-owned companies (low shareholder focus)
- Tender-driven/project-based businesses
- Value traps (“melting ice cubes”)
- Investing outside core expertise
- Poor governance or accounting quality
- Short-term investing mindset
Rigorous Diligence Process
Corporate Governance Checklist
Red Flags to Watch
- Frequent auditor changes or qualifications
- High/abnormal auditor fees
- Political exposure or legal issues (SEBI, ED, IT, etc.)
- High executive pay or misuse of funds
- Promoter pledging or equity dilution
- Weak dividend/buyback history
- Related party transactions
- Parallel private businesses by promoters
Accounting & Financial Checks
- Revenue recognition policies
- High working capital or receivables
- Weak CFO vs PAT conversion
- Unusual margins vs peers
- Frequent asset write-offs
- Capitalization of expenses
- High debt levels
- Defaults in statutory payments
- Large contingent liabilities
- Off-balance sheet risks
