Dear Sir,

Hope you are doing well.

We are glad to share that broader markets seem to have bottomed out and have started recovering.

As mentioned in our 15th Jul’19 article (LINK), Jul-Aug 2019 proved to be a great time for one to be greedy than fearful and we believe despite the 10-15% run up since then, small and mid-cap space should continue to be the good hunting ground for potential long-term investment opportunities.

Someone very rightly said, ‘instead of focusing on where you can make the most in the next 6 months, invert that and find situations where you can’t lose over the next few years. The latter is often times where you will find the next multi-bagger.’

We believe the above is truer than ever for Small and Mid-cap stocks and we are glad to be focusing on that space for our stock research.

We are also glad to share with you our performance for Alpha Model Portfolio. The same was started on 15th Aug’18 and consists of our researched stocks with market cap range of 100 crore – 15,000 crore.

 

Our Performance: Aug’18 – Feb’20

  • Alpha Model Portfolio – down by only 3.70% (including interest)

 Benchmark Indices Performance: Aug’18 – Feb’20:

  • NIFTY Mid Cap 100 – down by 6.54%
  • NIFTY Small Cap 100 – down by 17.79%

Though our portfolio is down 3.70%; we are frankly quite satisfied with the performance given the bloodbath small and mid-cap stocks witnessed in 2018-19.

In fact, given our focus area, i.e. 100 crore – 15,000 crore market cap range, we have outperformed small cap index by 14% and mid cap index by ~3% and hopeful of much greater returns in the years to come.

In the stock market it’s easy to perform when the overall market is going up; in fact, towards the later stages of bull run, junk stocks go up even more.

What is important though is how your portfolio performs during bear phase, because it’s easy to get decimated during market corrections on account of factors like leverage, concentrated portfolio, over-valued stocks, junk stock, etc.

Another important point that needs mention here is that sometimes we as investors get over enthusiastic or over pessimistic about individual stocks and their performance; however, what really matters is how well your overall portfolio is performing and that needs balance, discipline and some amount of diversification.

You cannot have all the winners in your portfolio, more so, when the economy is going through a slow phase. Like in a cricket team, you cannot have all 11 players as batsmen, similarly a portfolio needs to have a good balance of stocks from diverse sectors, segments, etc so as to avoid clubbing of risks and have a winning combination.

The portfolio also needs to be aligned in terms of prevailing market conditions. For instance, most of us would like to hold growth oriented high-quality stocks; however, one cannot justify buying such stocks at any price as that could result in short term gains, but the long-term returns would suffer.

Last, but not the least, if you wish to run a really concentrated portfolio of 5-10 stocks, never do it on the back of someone else’s recommendation/research and borrowed conviction.

 

Happy Investing and think different.

 

Best Regards,

Ekansh Mittal
Research Analyst
Web: https://katalystwealth.com/
Email: info@katalystwealth.com

 

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www.katalystwealth.com (here in referred to as Katalyst Wealth) is the domain owned by Ekansh Mittal. Mr. Ekansh Mittal is the sole proprietor of Mittal Consulting and offers independent equity research services to retail clients on subscription basis. SEBI (Research Analyst) Regulations 2014, Registration No. INH100001690. The model portfolio service is an extension and reflection of our research analysis and is in no way a portfolio advisory or buy/sell recommendation for you. The purpose of model portfolio is to get a tentative performance snapshot on portfolio basis than on individual stock basis.

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