Stalwart Advisors

Introducing Anti-‘ES’G smallcase by Stalwart Advisors

Posted by | Investing Framework | No Comments

Excesses at one end often create opportunities at the other, which can be leveraged by pragmatic investors. Environmental, Social & Corporate Governance (ESG) theme has gained tremendous momentum over the last few years with billions of dollars flowing out of companies that score low on some arbitrary parameters, to the companies that score high. In simple terms, it is a framework to rate businesses on how good are they for the environment, society and whether they have sound governance. On paper, this is certainly a desirable concept, but in practice it is extremely subjective with rating frameworks as well as corporates, trying to manipulate the system to suit their beliefs and situations. Investors are made to believe they can make excess returns while morally feeling good about it. The money …

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APL Apollo – A 5-Bagger in 2.5 Years

Posted by | Business Models, Stocks | No Comments

We bought APL Apollo at Rs 1,269 a share, in Oct 2018, and recently exited at a price of Rs 1,258 a share, however after the stock split of 5 for 1. At an unadjusted price of Rs 6,300, the stock has been a 5-bagger for us in 2.5 years. It’s been a great ride and we love the extra-ordinary execution by the management team in an otherwise slow-growing commoditized industry. We had hoped annual volumes to move closer to 2mn from 1.1mn, EBTIDA per ton to move from Rs 3,000 to over Rs 4,000, and net profit to move from 150 Cr towards Rs 400 Cr. Luckily the thesis played out perfectly and the market cap moved from Rs 3,000 Cr to over Rs 15,000 Cr. What’s heartening is …

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Only 2.5% of 8,000 Listed Indian Stocks Are Investable; Here’s The List

Posted by | Indian Markets, Investing Framework | 2 Comments

A lot of us have the quest to unearth those high-quality stocks which will create wealth for us, but how do we figure out which are those 15-20-25 stocks worthy of being in our portfolio from over 7,800 stocks listed on the Indian stock exchanges? Looking for the ‘right’ stocks from this vast universe is akin to looking for a needle in a haystack, you often end up wasting too much time with not so satisfactory outcome. As minority investors, it is difficult to conclude with any degree of confidence that a specific company is high-quality, which is often an abused term to just refer to a bunch of stocks which recently outperformed the markets like small-caps in 2017 or large-cap consumer stocks in 2019. But how about we turn the question on its head …

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Nifty at record high: Don’t get carried away; real opportunity lies in these stocks

Posted by | Indian Markets, Investing Framework, Investing wisdom | No Comments

My April’19 Article Written For Financial Express While Nifty is at a lifetime high, the average fall across 3,000 traded stocks is still 40-50% from their 2018 highs. Smaller the market capitalization bigger has been the bashing its stock has taken. Though there is nothing unusual about it – small companies swing wildly in both directions depending upon market sentiment; after all, they are thinly traded with low free-float (non-promoter holding, available for trade) so the rise in volumes can lead to high impact. The onlookers and investors who entered markets recently might have concluded by now that it is so safe to invest in large caps which not only did not fall much in the correction but now when markets are improving they are also participating on the up move. While purely …

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Listed MNCs in India: a good catch, but an opportunity slowly fading

Posted by | Indian Markets, Investing Framework, MoneyControl Column, Stocks | No Comments

My March’19 Column Written For Moneycontrol A basic tenet of long-term investing is to look for high quality listed businesses. This essentially implies 1) they earn returns above the cost of capital (reflected by return on capital employed), and 2) generate strong free cash i.e. they don’t require a lot of capital (fixed assets and/or working capital) to grow revenues and profitability. Those retained earnings can then be utilised either to acquire other companies in the same line of business or diversify. Alternatively, excess capital could be returned to shareholders via dividends or buyback. But have you ever wondered why would a promoter of such a business list his company as it involves diluting a significant chunk of his ownership to minority investors? For instance, why is a business like …

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Here’s what a customer visit to a Tanishq outlet tells you — that its financial statements won’t

Posted by | Business Models, Industries, Scuttlebutt, Stocks | One Comment

My February’19 Column Written For Moneycontrol The beauty about being in investing profession is that your mind is always curious and observing even when you aren’t ‘working’. Any occasion — a family holiday, house renovation or wedding — can effortlessly translate into scuttlebutt (primary research) where you experience so many products and services as a consumer, get to interact with dealers and also get to observe your family and other consumers engaging with those products and brands. I had one such wonderful experience recently. There was a wedding in my family and like all Indian weddings, it meant shopping jewellery for the couple, relatives, gifting, etc. My family and relatives have been traditionally dealing with two jewellers in our neighborhood who belong to same community (Sindhi) – one of them …

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Three Forms of Value Investing

Posted by | Investing Framework | One Comment

While there are various styles of investing, we can categorize them under three key heads: Special Situations (Arbitrage): Open offers, rights issue, mergers would all fall under this category. One is betting on a specific corporate action with well-defined timelines and aim to make a certain return independent of what happens to the company’s fundamentals or market sentiment. Typically aim is to beat fixed income return while not taking any material risk. Holding period ranges between few days to few months. Re-investment risk is high as one has to keep looking for new opportunities which also involves sitting on cash in between. (Suggested Reading: You Can Be A Stock Market Genius By Joel Greenblatt) Statistical Bargains: These are average businesses which are available very cheap – below liquidation value/cash, at …

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Forget market-caps, here’s how we classify stocks

Posted by | Food for thought, Investing Framework | No Comments

Mega-Caps, Large-Caps, Mid-Caps, Small-Caps, Micro-Caps, Nano-Caps… As if the business analysis wasn’t complicated enough, we have divided the universe based on size as well. But does size really matter? The answer will be a big yes if you are running a mutual fund, or some other regulated fund like a pension fund, which has to 1). Comply with SEBI guideline and stick to fund mandate by investing in the universe of stocks which comply with that and 2). Ensure enough liquidity so as to be able to enter and exit with minimal impact cost. But the same isn’t true for individual investors and in fact is their biggest advantage (See Jatin Khemani’s presentation on ‘Individual Investor’s Real Edge – TIA 28th Jan 2017’). Generally speaking, large caps have been around for …

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What really goes behind Stock Research?

Posted by | Investing Framework, Investing wisdom, Stocks | No Comments

My post on ‘What Really Goes Behind Stock Research?’ where I talk about Initial Research Vs Maintenance Research & returns per unit of stress, dwelling further upon an old post by Prof. Sanjay Bakshi, written for Safal Niveshak’s Outside the Box newsletter: Click here to read the post: https://www.safalniveshak.com/low-stress-stock-research/    

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[Video] Stock Idea Presentation at TIA’s 20:20 Ideas Summit by Jatin Khemani – 20th Oct, Chennai

Posted by | Investing Framework, Investor Meetup, Stocks | No Comments

A Stock Idea presentation delivered at TIA’s 20:20 Ideas Summit at GRT Grand, Chennai on 20th October 2018 by Jatin Khemani, CEO & Founder of Stalwart Advisors: Presentation (Video):   Presentation (Slides): FREE Access to Initiating Coverage Report & AGM Note on this stock idea on Guest Dashboard https://investor.stalwartvalue.com/ First-time visitors need to register to log in to the dashboard. For any queries or feedback, please write to us at support@stalwartvalue.com Disclaimer: This is not a recommendation to Buy/Sell. Read complete  disclaimer here .

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