Equity Investing for the Long Term Ankur Jain Investment Advisor SEBI Regn # INA 100001158 1
A few words ❖ Investing is perceived to be an extremely complex exercise, which it is not. More wealth has been lost by investors due to complex theories and constant churn in the portfolio than anything else. ❖ Investment is at its best when it is understood and executed in a simple manner. 2
Investment Advisor : Ankur Jain Education: B. Tech [NIT, Jalandhar] MBA [MDI, Gurgaon] Work experience : 12 yrs + Axis Bank: 6 months Tactica Capital: 8.5 yrs Investment Advisor: 3 yrs + 3
Investment Philosophy: How do I think? ❖ Deeply influenced by teachings of Warren Buffett, Charlie Munger, Philip Fisher and Peter Lynch. ❖ Stocks are not trading chips but they represent ownership in businesses. 4
Investment Philosophy: Downside protection “Rule # 1: Don’t lose money Rule # 2: Don’t forget Rule # 1” - Warren Buffett 5
Businesses: What do I look for? Strong and durable competitive advantages Unique differentiators Growing free cash flows for a long foreseeable future Good rates of return on capital 6
Management: What do I look for? Operational competence Trust Financial discipline 7
Valuation: How much to pay? Price paid for acquiring a business should be reasonable. There should be an adequate “margin of safety” between the value assessed and the price paid because An investment which is great at one price can become dumb at another. 8
Attributes which I strive for 9
Focus: To do one thing at a time 10
Depth: Total immersion in the work at hand 11
What I don’t do ❖ I am a focused equity investor. I don’t invest in any other asset class like gold, real estate etc. ❖ I avoid futures and options as I don’t understand that area. ❖ I don’t think and don’t read what others think about the direction of markets. ❖ I don’t read technical charts. They lie outside my circle of competence. 12
Research Methodology ❖ Bottoms up investor — Laser focused on finding good businesses. ❖ I am curious about businesses and love analyzing them. I dive deep into a business and emerge once I am convinced about it’s beauty — or the absence of it. ❖ I don’t use any financial software for analysing businesses. I pick up financials directly from annual reports and other documents available in the public domain. 13
Position Sizing ❖ Difficult triumvirate to find • High quality businesses • Run by competent and ethical managements and • Available at reasonable valuations 14
Position Sizing Hence, Once convinced of an idea, I put a large amount of money behind it. Range of 5-10 positions in the portfolio. Maximum position size : 30% at cost. 15
What can you expect from me? ❖ You can expect an honest advice. ❖ My money will travel in the same direction as yours. 16
What I look forward from you? ❖ Be prepared for volatility . Stock markets by their very nature are volatile. Though the portfolio should not suffer permanent loss of capital over long periods of time, but it will have its share of marked to market fluctuations. ❖ Patience . More money is made by people who display patience. Value investing is like growing trees. We have to provide the right seed, the right amount of fertilizer, water, sunshine and time. ❖ Confidentiality . All ideas comprise my intellectual property. As an investor, I trust you and expect you to maintain complete confidentiality about the ideas. 17
What have been my portfolio returns? Period 1st January, 2009 - 31st December, 2017 Proprietary Capital Nifty 50 Annual Return 38.57% IRR* 15.09% CAGR** Cumulative Return 1884.47% 354.33% *IRR : Internal Rate of Return **CAGR: Cumulative Annual Growth Rate 18
Advisory Fee Management Fee (Fixed) Fee : 1%* per annum Performance Fee (Variable) Hurdle Rate : 8.25% ** per annum Fee : 20%* of the profits above the hurdle rate * Plus applicable taxes. ** Hurdle rate is benchmarked to 5 year SBI FD rate. SBI FD Rate +2% p.a. Hurdle rate to be reset every 5 years. 19
Contact E-mail : contact@calculatedwagers.com Blog: calculatedwagers.blogspot.in 20
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