Q3FY19 – Portfolio Performance

Market Snapshot The Nifty posted positive returns on a year-to-date basis in 2018 while the midcap and smallcap index saw a deep correction. The earnings growth remained in single digits and the PE Ratio continues to trade at expensive levels. Nifty 2018 Snapshot Most of the retail investor’s portfolio was in midcap and smallcaps. This is where the pain was in 2018. A lot of stocks had corrected by 50% (Read: Sentiments – Market correction and more) and popular names have trapped investors. Portfolio Performance The Alphamultiple portfolio rose +0.67% for the quarter. We outperformed the Nifty 50 TRI but under-performed the mid & smallcap TRI. On a YTD basis, the Alphamultiple portfolio fell (9.04%). We maintained high cash positions in the portfolio throughout the year a... Read Full Article

Market Valuations – November 2018

Market Valuations Over the last few weeks, the Nifty index has seen a decent double digit percentage correction. The midcap and smallcap index are performing even worse. The buzz on the street is that the market valuations are at a healthy zone and it is a good time to start picking stocks. The current valuations of the Nifty 50 index are given below. The mean PE of the Nifty is ~ 19 and the index is now trading above it’s +1 Standard Deviation. The PE Ratio was at 28.55 in late August 2018. When the PE Ratio is high, the prospective returns are low even over a multi-year period. Sticking to quality stocks at low to fair valuations and a healthy percentage of cash in the portfolio can help navigate inflated valuation periods in the market. The current valuations of ~ 25x PE is stil... Read Full Article

Q2FY19 – Portfolio Performance

In this post, we detail the Q2FY19 Alphamultiple Portfolio performance for the quarter ended 30th September, 2018. We document our portfolio performance on a quarterly basis for the benefit of our readers and those who are interested in knowing the performance of our advisory service. This post focuses not on the company results but on the price performance. Q2FY19 Alphamultiple Portfolio Performance While the quarter was a great one for the largecap indices, the small & midcap indices performed poor by delivering -5.19% and -13.68% returns respectively. Q2FY19 Alphamultiple Portfolio Performance The largest drawdown on our portfolio will be ~ 17% from the peak. However, for most investors the drawdown is in the range of 10% to 15% from the peak due to low allocation to equities and... Read Full Article

Sentiments – Market Correction and More

The market correction is real. For a layman who doesn’t track the stock market, nothing has changed. The Nifty and Sensex are down just 5% to 7% which is normal for a volatile asset class like equities. But most of the portfolios in the market (Funds, PMS, retail accounts, etc) are down in double digit percentage. Market Correction Market Correction Impact As evident from the table above, the smaller companies are bleeding. Most of the retail portfolios are heavily invested in small & mid caps. Most of the stocks below Rs 10,000 Crores market cap are down by more than 30%. How many are down? More than 81% stocks are down by 20% or more. Infact, more than 50% stocks are down by 40% or more. This gives a true image of the market breadth. While the broader indices look fine, the sto... Read Full Article
Cash to Market cap ratio can help spot bargains

Cash to Market Cap – Companies with lots of cash

Cash to Market cap Cash to Market cap will basically tell us, what % of the current market cap of the company is currently in cash. For example, let’s say company ABC Ltd. trades at a market cap of Rs 5,500 Crores. It has a total debt of Rs 500 Crores and cash & bank balance of Rs 2,000 Crores. This means that the entire business of ABC Ltd. is virtually available at Rs 4,000 Crores! Many times, the cash to market cap ratio can help investors shortlist stocks that offer a decent Margin of Safety but at the same time, investors have to be skeptical of companies which are over-stating (faking) their cash & bank balances. In this article, we look at a list of companies that have low long term debt, high cash & bank balance therefore translating to a high cash to market cap r... Read Full Article

Market Valuations – August 2018

The Nifty index is at 11,600. We are at all time highs but most of the investors are seeing their portfolio down from highs due to a considerable erosion in the mid & small cap segments. It is safe to say that we are now in that phase of a bull market when most stocks have stopped performing and a few names are pulling the index up. We see a correction in individual stocks as a healthy event which restores some sanity in the valuations. Nifty 50 – the largecap index still trades at expensive valuations [PE of 28+] with earnings growth at just 4%.  Earnings growth is at a bottom and there are signs of margins expanding for companies across sectors. A big reason for the seemingly low earnings growth is the write-off’s in banking companies for the NPA’s. Once the NPA is... Read Full Article

Alphamultiple Advisors – A new avatar

Dear Reader, We have changed our firm’s name from DalalStreetBulls to Alphamultiple Advisors. Subsequently, our domain has also changed from www.dalalstreetbulls.com to www.alphamultiple.com VISION: To be the most ethical, transparent and the best advisory firm To deliver high returns for our investors consistently To eliminate human bias from investing MISSION: Select the best companies to invest and participate in their growth story Be part of India’s transition from a $1,600 GDP per capita to a $8,000 GDP per capita economy Invest in a blend of growth and value stocks & double the portfolio every 4 years   Please note a change in our communication details: Email Id: info@alphamultiple.com & raghav@alphamultiple.com   The change is with an eye on the... Read Full Article