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We suggest that investors looking to make a lump sum investment to stagger their investments

28-Oct-2017

Mr. Nilesh Shetty

In an interview with Anjali Raulgaonkar from Capital Market Publishers, Nilesh Shetty, CFA, ACMA - Associate Fund Manager - Equity - Quantum AMC Pvt. Ltdsaid, We have a liquidity filter of at least $1 million daily trading volume in the stocks that we own; apart from that we do not have any market capitalization or sector bias.

Excerpts:

Equity markets are already up. Is there more room to grow? How are you approaching markets right now?

Earnings growth have not reflected the sharp rise in share prices significantly expanding the PE (Price/Earning) multiples. Despite factoring an earnings recovery, valuations look expensive. Our sense is downside risks are high at the current moment and investors need to be cautious. Markets can continue to rally based on flows but it will only further elevate downside risks.

What is your investment space? Any stock specific traits which make it part of your portfolio?

We have a liquidity filter of at least $1 million daily trading volume in the stocks that we own; apart from that we do not have any market capitalization or sector bias. We have a predetermined Buy and Sell limit for each stock actively covered by our research team. The limits are decided based on sustainable cash flow generating ability of a company and its long term valuation bands. Once a stock hits our buy limit it finds its way into our portfolio and once it hits our sell limit it exits our portfolio.

What kind of stocks you avoid and why?

Companies with weak corporate governance and a history of treating minority shareholders poorly do not come into our portfolio.

Is there any pre-emptive miss you regret (for instance, not investing in a stock or not possessing enough of it)?

There have been instances where companies have come very close to our buy limits but did not actually go below it for us to be able to buy, which later on have become multi baggers. But given that we follow a strict process, we do not regret not being able to buy the stock.

What will be your advice to investors?

We remain positive on Indian equities over the long term. However, we are cautious in the near term. Markets have seen a significant rally not supported by earnings growth. Upside in Indian equities is limited in the near term. The same is reflected in high cash levels held in our schemes. We suggest that investors looking to make a lump sum investment to stagger their investments. SIP investors do not need to change their investment allocation plan.