Dear Sir,

Hope you are doing well and staying safe.

We are glad to share that broader markets have recovered well from the lows of Mar’20 and even though there might be some correction or consolidation going forward, we may not see the Mar’20 lows again.

As mentioned in our 20th Mar’20 article (LINK), March 2020 proved to be a great time for one to be somewhat greedy than too much fearful and we believe despite the run up since then, good companies with strong balance sheets from the 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 Model Portfolios. We started maintaining them since 15th Aug’18 and consist of our researched Investment ideas and Special situation opportunities.

 

 

So, as can be observed above, we have outperformed the benchmark indices over both the shorter and longer periods.

In fact, given our focus area, i.e. companies between the market cap of Rs 100 crore – 15,000 crore and the fact that small and mid-cap stocks have under-performed their large cap peers since 2018, we are quite delighted to have outperformed small and mid-cap indices by a huge margin and even more happy about the fact that we have started outperforming NIFTY 50 as well.

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 the 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.

In fact, if you are patient enough, look for good companies in beaten down sectors. They may not reward you immediately, but when they do, they do in loads. You can read more about investing in beaten down sectors at the following links: LINK 1, LINK 2

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

 

By subscribing to Alpha & Model Portfolio/Alpha Plus & Model Portfolio, you agree to accept the following terms/conditions:

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.

The model portfolio service is basically an information service and doesn’t take into account your personal financial situation or risk profile. Please consult your investment adviser before following or implementing the same partially or in totality.

The transactions mentioned are not the actual transactions, but take into account the ending prices for the day and ~0.3% transaction charge.

For the purpose of calculation of returns, the surplus cash (cash i.e. not invested in stocks) will be assumed to be invested in liquid funds at around 6% return per annum.

There’s zero refund policy for model portfolio service because as soon as you subscribe to the same you get access to the complete portfolio snapshot.