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SMS INVEST TO 56677
Call 1800-209-0007 to get more details.
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- Idea Generation
Based on the portfolio objective, we start filtering down the possible investment universe to more attractive opportunities. The process involves company, industry, economic and technical analysis in alignment with the investment objective of the underlying portfolio. The portfolio's investment objective is the key for defining the investment universe, company selection, industry and asset allocation.
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- Matrix Analysis
As part of the Matrix approach we analyze, bottom up, the fundamentals of the companies that are part of the universe. We use external research and find it useful as a source of information and financial models. However, we believe our direct and in-depth interaction with a company and its competitors, suppliers and buyers - wherever feasible and possible, helps us arrive at our own unique insight into the company. The maximum inefficiency in the markets is at the company level, and an in-depth research effort can generate a knowledge advantage and superior performance.
To this, we add our top down economic views and industry views - leading to industry and asset allocation decisions. The economic and industry analysis also has its implications on company selection. Technical analysis is another input for asset allocation decisions. All of this is in keeping with the investment objective of the specific portfolio.
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- Security Selection To help select stocks for the portfolio, we use a proprietary stock categorization system. The objective of our stock categorization system is to enable us to identify stocks that are likely to be the best investments from within our universe. Each category of stock has a description of fundamental attributes that we expect the company to possess. The categorizations are as follows:
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| Stock Category |
Descriptions (eg.) |
Growth Prospects (eg.) |
Company Attribute (eg.) |
Financial Parameter (eg.) |
| Star |
Young companies |
High growth |
Entrepreneur vision, scalability |
Operating Leverage |
| Leader |
Established companies |
In line or better than industry |
Track record of leadership, globally competitive |
Industry leading margin / ROE |
| Warrior |
Young / established companies |
Better than industry |
Unique proposition and / or right place, right time |
Margin & ROE expansion |
| Diamond |
Company with valuable assets |
Low growth |
Management intent to unlock value |
Value of asset / business |
| Frog Prince |
Company in a turnaround situation |
Back to growth |
Intrinsic strengths in core business |
P2P, ROE expansion |
| Shotgun |
Opportunistic investment |
Positive surprise |
Corporate event, restructuring, earnings news |
Event visibility |
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| Commodities |
Call on the cycle is paramount |
Positive |
Integration, cost efficiency, globally competitive |
Profit leverage |
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| * P2P - Path to Profit, ROE - Return on Equity |
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- Stocks that fit into one of these categories typically display superior return profiles, but more importantly this enables portfolio managers to focus on the attributes that drive stock price performance and keep a watch for red flags.
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- Portfolio ConstructionThe portfolio manager has the primary responsibility for portfolio construction based on the investment objective of the portfolio. Portfolio construction guidelines are laid down for each portfolio and reviewed on a need basis and otherwise regularly on a regular basis. Every investment decision we make is by keeping in mind the investment objective of the portfolio and how the security will affect the overall portfolio. In addition, we also look into the current Economic / Industry views that impact industry and asset allocation decisions for the portfolio. Technical views which are relevant to asset allocation, if applicable are also taken into consideration. Our preference is for companies with the characteristics as defined in our stock categorization framework.
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- Sell Discipline We may sell a stock because the fundamentals of a company, industry or economy have changed or a company's competitive advantage appears to have deteriorated. It could also be a function of alternative opportunities being available at a more attractive valuation or an inability to justify prevailing valuations.
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