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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.

Alphamultiple Performance

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.

Alphamultiple Advisors performance review

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-April 2020. Investors are still wondering what drove the markets up despite the economy being at it’s worst in decades. Countries which had survived the 2008 global financial crash have also contracted because of the lockdowns.

Portfolio Changes

We used the lower prices in March and April to add some bluechip names to the portfolio. We did not make any transactions between 20 April and 20 June, except for taking exposure in the pharma sector. There were a lot of factors which made us stay away from taking up fresh positions in those two months, but the visibility is better now. We foresee a lot of churn in the portfolio coming up in Q2FY20 as we look to book losses in stocks that we have held for the last 2 years. One reason we could add stocks in March and April was CASH.

We had almost 35% of our portfolio in cash before the markets crashed as we believed the market valuations were stretched. In the coming quarters, we are looking to add quality small and midcap names to the portfolio. We believe that over the next 3 years, the small and midcaps would deliver higher returns. The small and midcaps are at cheap to fair valuations. Many largecaps look expensive now.

Note on the economy

We have been getting a lot of queries about the economic outlook, sector performance, impact of Aatmanirbhar Bharat and other geo-political factors. As much as we wish to predict outcomes, these topics are outside our scope of understanding. We will stick to what we believe in – Buy quality stocks at cheap to fair valuations.

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 drawdowns. Some stock picks of ours are up by 40% to 60% over the last one year which has reduced the overall drawdown.

9 out of 11 stocks that we own in the core portfolio have a market capitalization of less than Rs 5,000 Crores. This makes our portfolio pre-dominantly smallcap.

Changes

We closed the Wipro buyback with a profit of ~ 1%. However, many clients bought the shares of Wipro at higher prices (above Rs 290) and thus incurred a loss of ~ 3% to 5% on the buyback. Our expectation was to earn a 5% to 9% return on the buyback but the acceptance ratio was much lower than anticipated.

We have recently added a company operating in the healthcare space. We have changed our outlook on the markets and are looking to increase equity allocation in the coming months. Earlier we wanted to stay heavy on cash.


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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 and have recently increased allocation above the 50% mark (Read: Live Portfolio).

Changes

This quarter, we had one exit – Dewan Housing. The stock crashed more than 50% in one day and we exited immediately. However, we had partially booked profits in June and the allocation to the portfolio was low.

We added two stocks to the portfolio in this quarter. Both the stocks have a different client base (B2B and B2C) and we have a 3-5 years view on each of these stocks. The companies are debt free, cash rich, generate high ROE and have a long runway for growth in the years to come.


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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

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 high cash position of the portfolio. We have been on more than 50% cash in the portfolio since early 2017. The cash will be utilized to add good companies at low to fair valuations.
We booked out Dewan Housing and Muthoot Finance in June by nearly 50%. Thus, our portfolio did not take a major hit in the recent NBFC crisis. We have avoided NBFC space over the last few years except for the above mentioned companies. Investors will appreciate that we do not follow any thematic investing and avoid chasing trends.

Are we satisfied?

Yes we are. Markets have their own seasons and at present we are going through a steep correction in small & midcaps where the valuations were astronomically high. We feel that our defensive stance is now paying off as our portfolio is withering through the market correction without any major drawdown.

Is this a good time to invest?

Absolutely. If you are a serious investor, you have to face all the market conditions with confidence and patience. You cannot always be successful in trying to time the market by buying at the lows and selling at the peak. Investors who start now might not see consistently high returns over the next few months but they will be more disciplined than those who start investing when the bull market’s momentum is high.

Where are we investing?

Our approach is not thematic but it is company specific. Ideally, we look to buy companies which can offer an expansion in valuation multiples as well as earnings growth. Also, it is important to Own what you know and know what you know.

How many stocks do we own in our portfolio: Live Portfolio

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