Q1FY21 – Portfolio Performance

The Nifty 50 TRI posted a 23.6% gain in Q1FY21 while the midcap 100 TRI posted a 28.7% gain and the smallcap 100 TRI posted a 31% gain in the same period. The Alphamultiple portfolio was up 20% in Q1FY21. Q1FY21 Performance Portfolio Performance While you read this and stare at the numbers on the screen, a +20% and -20% look just normal market movements. But that very moment when your portfolio had melted 30% in just few weeks would have been scary, right? The numbers capture performance but don’t even come close to capturing the volatility. Performance for the last 4 quarters Our portfolio fell lesser than the markets fell in Q4FY20 and also rose lesser than the markets rose in Q1FY21. The Q1FY21 surprised most investors as the markets recovered sharply after the crash of March-Apr... Read Full Article

Q4FY20 – Portfolio Performance

The Nifty Total Returns Index (TRI) has posted a –25% return for FY20 basis while the midcap and smallcap TRI are down by –35% and -46% respectively. Our portfolio is down -20% on a YTD basis. FY20 Returns Portfolio Performance Our portfolio has not escaped the market carnage. From the portfolio peak in January 2018, our portfolio is down by -30%. Ours is a predominantly small-midcap portfolio and it has fallen less than the TRI of the largecap, midcap and smallcap. 5 quarter performance For Q4FY20, the Alphamultiple portfolio fell by -20.59% which is much less than the Nifty, Midcap and Smallcap. We had a high cash allocation in our portfolio and we have utilized some portion of it in the recent market correction. While this is a great time to increase allocation to equ... Read Full Article

Nifty PE – Market Valuations – April 2020

At the current PE of 19.52, Nifty is at its cheapest since 2014. The long term mean PE of Nifty is 19.95 and we are just a tad bit below those levels. Nifty PE Chart Over the last 4 years, the markets have traded at premium valuations. Trading at such valuations, in the hope of higher earnings growth, for such a long time made the investors think that 22+ PE was the new norm. Fund managers justified it citing forward Nifty PE ratios. We have been through a period of subdued earnings growth due to multiple factors and the growth has always been on the horizon, but it never came.  Nifty’s earnings are growing at ~ 9% and they have been below 10% for the last 4 years. Once again it has been proven that investing at higher PEs can give negative to low returns for few years. Looking at other... Read Full Article

Q2FY20 Portfolio Performance

The Nifty has posted a 5.17% return on a YTD basis while the midcap and smallcap indices are down by 10.44% and 13.63% respectively. Our portfolio is down 2.55% on a YTD basis. YTD Performance Portfolio Performance 5 quarter performance The Alphamultiple portfolio fell 2.03% for the quarter. We under-performed the Nifty but out-performed the midcap and smallcap indices. From its peak of Jan 2018, the portfolio is down ~ 18%. As our portfolio is primarily concentrated on smallcaps, we have maintained high cash allocation in the portfolio over the last two years. But, now our allocation equities has increased to 63% (Read: Live Portfolio). Our investments in a credit rating company and a media-entertainment company have performed dismally but other investments have balanced out those drawdow... Read Full Article

July 2019 Newsletter – Negative Sentiments

Market Outlook As we write the July 2019 Newsletter, the sentiment on the street is negative. Investors do not want to put their money in small-caps or even mid-caps. Whoever is still sticking to equities is now talking about investing in Bajaj Finance or other large caps that are at 52-week highs. Just a simple trend analysis of the term Multibagger on Google will show you this graph: Multibagger Search Trends Even multibaggers have fallen out of trend now. Look at the peak of 2017 and compare it to the scenario now. Investors want to invest in Index funds, large caps and want to stay away from small & mid-caps. The mid-cap forward PE tracked by institutional analysts usually trades at a discount of 5% to 10% to the Nifty’s forward PE. This discount is now above 20%, a level seen wh... Read Full Article

April 2019 Newsletter – High PE Ratio

The markets made an all-time high in April 2019. The markets are consolidating close to these highs. The General Election of 2019 is going on and as we write this newsletter, most of the constituencies have already voted. By the time we write to you the next month’s newsletter, the election results would have been out. While the Bharatiya Janata Party is most likely to be the single largest party, the markets will be having a keen eye on the number of seats the BJP wins on its own. Anything above 220 will keep the sentiment positive on Dalal Street. However, if the single largest party fails to win 200+ seats, then the markets could react adversely. In 2009, the markets were locked in upper circuit after the Congress won 200+ seats on its own and the UPA retained power with an even more ... Read Full Article

Alphamultiple Shuffle Portfolio

In our quest to reduce human bias from investing, we have come up with a high risk – high return strategy. This strategy makes up the Alphamultiple Shuffle Portfolio which consists of 15 stocks. The portfolio follows a Buy and Hold approach. Alphamultiple Shuffle Portfolio Strategy Market Cap of companies: Rs 300 Crores and higher Number of stocks: 15 Holding period: 1 Year Start Date: 1st working day of June Cash Holding: NIL We churn the portfolio only once a year. The expected returns are 15% p.a. and higher over a 5 year period. Rationale We look to buy decent businesses at cheap valuations. The markets are known to mis-price stocks and create bargain opportunities. A basket of 15 stocks creates a diversification that is neither too concentrated nor too diluted. While not all s... Read Full Article