A man takes an Indian ten rupee banknote and one rupee coins out of a wallet in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

Investors Carnival: Ashish Chugh’s Mantra For Investing In Micro Caps

Investors should focus on the management and strategy and not on the stock price while investing in micro caps, according to Ashish Chugh, founder of Hidden Gems Advisory.

“Some company’s businesses are such that they take about three to five years to turn profitable and hence micro-cap investors need to be patient,” Chugh said at the Investors Carnival event In Goa.

Investors can get multi-bagger returns by identifying mis-priced stocks, he said.

Biggest profits come when an ugly duckling becomes a swan.
Ashish Chugh, Founder, Hidden Gems Advisory

Here are the key advice from Chugh while investing in micro caps

  • Good risk appetite and risk-taking attitude a must while investing in micro caps.
  • Must track the company’s performance with the industry.
  • Investors should not buy or sell stocks based on high-profile investor’s reactions and bulk deals.

The thought process of investing in micro caps:

  • Investors must conduct their own due diligence and develop independent thinking.
  • Investors should look at the company’s business, potential growth and management.
  • The valuations must be attractive.
  • Shareholders should analyse the balance sheet thoroughly when stock prices are quoting lower.

Mis-priced stocks–An opportunity to invest:

  • Investors should look at short-term negatives while investing in stocks.
  • They must look at companies with capital expenditure.
  • Investors must look for stocks that are unnoticed and have least interests by the street.
  • They should not hunt for triggers and must remain focused on the company’s business and valuations.

Watch Ashish Chug's full presentation at Investor Carnival here

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