Investors monitor stock prices in the trading gallery of the RHB Investment Bank headquarters in Kuala Lumpur, Malaysia. (Photographer: Sanjit Das/Bloomberg)

The Best Of Alpha Moguls 2018

On BloombergQuint’s special series Alpha Moguls through 2018, fund and wealth managers shared insights into where Indian markets are headed and what investors must do to counter volatility and create wealth. Here’s a compilation of the best of Alpha Moguls episodes from last year:

Short on time? Watch a quick summary here:

Earnings: The Only Determining Factor While Choosing Stocks, Samit Vartak Says

It is a good time to accumulate quality mid caps that have earnings visibility as valuations for most of them have come off sharply, according to SageOne Investment Advisors’ Samit Vartak.

“For the “buy and hold” category, investors need to look at companies that do well in bad times as those are re-rated the most.”

Here are some examples that Vartak cited were investors’ favourite in the recent past but disappointed because of declining growth.

When To Buy? When To Sell? Here’s Mohnish Pabrai’s Take

If buying is complicated, “selling is 10 times more complicated”, according to Pabrai Investment Funds’ Managing Partner Mohnish Pabrai.

“A great company, with a great growth and great management, should be given some rope,” Pabrai said in one of Alpha Moguls episodes, adding that the investors should sell such a company not when it’s fully priced or when it is overpriced, but when it’s egregiously priced.

You learn about a business only after you own it. One of my biggest mistake is selling too early. I have seen the 100 baggers that I’ve bought went on to become 100 baggers so many times after I sold them. I ended up capturing only double or triple times.
Mohnish Pabrai, Managing Partner At Pabrai Investment Funds

Here’s why Pabrai believes that selling is more complicated than buying.

How To Benefit From Investment Cycles, Kenneth Andrade Explains

The current investment cycle is markedly different from the economic downturns of 2009 and 2013 in that corporations aren’t fighting to stay relevant, said Kenneth Andrade.

This, according to the founder and chief investment officer of the money management firm Old Bridge Capital, gives enough “ammo” in terms of confidence to a fund manager to go out and invest in businesses and make portfolio gains over the next few years.

The ability of a company to remain solvent in the next decade is much higher where you have the leverage cycle playing out.
Kenneth Andrade, Founder And Chief Investment Officer At Old Bridge Capital

Click here to read and watch the full conversation.

Is Monitoring Stocks The Only Thing That Portfolio Manager Needs To Do?

ValueQuest’s Chief Investment Officer Ravi Dharamshi doesn’t think so.

“Stock pickers are so focused on individual stocks that sometimes we miss the macros and they hit us hard every few years,” he said. “And 2018 has been one such scenario where macros led to a sharp correction.” Most people didn’t anticipate such a correction, especially in the broader markets, according to him. “A large part of the drawdown is done, but that doesn’t mean that a wealth creation cycle would begin soon.”

Here’s Dharamshi’s advice on the discipline that one needs to follow while investing:

SMILE: Veteran Vijay Kedia’s Secret To Investing

Bet big and ride through tough times is the advice from veteran investor-trader Vijay Kedia.

While luck plays a big part in stock market investments, knowledge, courage and patience are the cornerstones, Kedia said. “I usually buy a stock that I know will not gain for the next six months... I need managements which are clean, having a fire in the belly and there is potential for the company to grow for the next 15 years.

Kedia has crunched all that into what he called the SMILE approach to investing: that’s ‘small in size, medium in experience, large in aspiration and extra-large in market potential’.

Click here to read and watch the full conversation.

Picking Consumption Leaders Of Tomorrow

India’s consumption market needs disruption as it has remained static for decades because of none to minimal innovation, according to Nikhil Vora, founder of consumer sector-focused investing firm Sixth Sense Ventures.

“There is no intellectual property attached to any consumer product, and yet it was symbolised by a duopoly of established brands like Hindustan Unilever Ltd. and ITC Ltd.,” said Vora. The result was that entrepreneurs were too afraid to enter the market as distribution remained controlled, he said. Times are changing fast as the next generation has better risk-taking abilities.

Click here to read the consumption themes that Vora is betting on.