| 'Mindset differentiates the good fund manager' |
| Rex Cano / Mumbai September 14, 2009, 0:42 IST |
We kick off a series of interviews for Smart Portfolios Season II with a discussion on the markets with Praveen Panjwani assistant vice president of Edelweiss.
In Smart Portfolios, Panjwani follows a diversified investment style with a view to capture either growth or value unlocking. Since the beginning of Smart Portfolios on September 1, Panjwani has invested mostly in small-caps and holds around 52 per cent from the total corpus in cash. He has a total of 11 stocks in his portfolio – VIP Industries with a scintillating gain of nearly 47 per cent is his top pick in the last two weeks. On the other hand, McNally Bharat down over 15 per cent from his cost price is the major drag on his portfolio. As of September 11, Panjwani’s networth stands at Rs 10.10 lakh, up a little over a per cent from the initial Rs 10 lakh corpus.
What is your approach to markets and investment style?
The markets are an exhilarating and rewarding place to be if one can control emotions and be disciplined in the investment process. Spend enough time in the market and one will realise that the market commands high respect amongst participants and most rightly so both for its short term volatility and long term efficiency. The investment style for the purpose of this initiative is a distinctly stock specific approach with an effort to capture relative outperformance.
As a fund manager, explain the markets in short for the novice investor? And what would be your contribution to Smart Portfolios, as this is learning exercise for our readers.
Markets are a proxy to the Indian growth story and present a real way for an individual to transform into an investor. Putting it simply, a first time investor should start small and have patience. One thing the novice investor has on his/her side today is access to information about the markets – be it print, business television channels and internet. The critical aspect is filtering which information is relevant and which is not as well as keeping a clear style and process in the face of information overload. If the readers can use even one of the aspects mentioned over the course of this session and add a clearer structure to their own investing process or even if we get one new investor initiated into the equities fold, our job is done.
What are the qualities of a good fund manager?
The mindset is what differentiates the fund manager. This mindset would be a combination of courage, conviction and independent thinking aided by a sound disciplined process. It would enable the fund manager to take objective decisions and cut out the noise of the market in influencing investment decisions.
You have started your portfolio with small-caps, what's the rationale? And any specific reasons for avoiding large-caps?
The markets may continue to trade in a range and in such a scenario a more stock-specific approach would be called for. There is no particular bias against large caps at this time; the portfolio would be built gradually.
What are the stocks or sectors you would focus on going forward?
Presently the infrastructure and material handling space which is an infrastructure corollary look interesting. Also certain companies in the branded products, auto ancillary and government services arena which present value are on the radar.
What are the key factors that you look into a stock before selecting it?
The approach of “ownership” of a business carries with it a set of questions - How has the company grown, does it have a sustainable return on capital employed, the visibility on future prospects of the company and the industry it operates in, the state of the balance sheet and the quality of management. And above all, what value are you buying it at?
The markets have been range-bound for quite some time, what are your expectations of the broader market?
There are two aspects to this, first of all after a directional upward move, a range bound market is generally considered to be good for the long term. Second, this would present stock pickers opportunities in the short term. Various stocks have moved up significantly and outperformed the indices in the last three months. For those who believe in stock picking, such markets are the best markets to be invested in.
What are your targets or what kind of returns do you expect?
Since the portfolio is being constructed as a long only portfolio it would be simpler to outline the target as one of relative outperformance to the benchmark.
Your advice for investors?
Have a plan. Most of us invest with a purpose or goal or an objective in mind. One must clearly know why one is buying a stock, and know what to look for on the trade. Somewhere along the way, one often gets swayed by stocks which may be presented as the next big thing or a flavour of the month which may take one off track. When there is clarity of the investment objective, then the choices become very clear as well.
| PRAVEEN PANJWANI Assistant Vice President, Edelweiss | ||||
| Top Holdings | % of assets | Cost Price (Rs) | Current price (Rs) | Value (Rs lakh) |
| CMC | 9.83 | 1070.28 | 1103.20 | 0.99 |
| VIP Inds | 7.19 | 109.85 | 161.35 | 0.73 |
| McNally Bhar | 6.29 | 193.00 | 163.75 | 0.64 |
| Aptech | 5.09 | 256.15 | 263.55 | 0.51 |
| Godrej Inds | 5.00 | 194.70 | 197.95 | 0.50 |
| Total investments | 47.92 | - | - | 4.84 |
| Cash | 52.08 | - | - | 5.26 |
| Net worth | - | - | - | 10.10 |
| Returns (%) | 1.03 | - | - | - |
| AMAR AMBANI Vice President (Research), India Infoline | ||||
| Top Holdings | % of assets | Cost Price (Rs) | Current price (Rs) | Value (Rs lakh) |
| Reliance Comm | 5.91 | 286.30 | 297.85 | 0.60 |
| IFCI | 5.84 | 53.90 | 58.85 | 0.59 |
| MRF | 5.76 | 4659.70 | 5279.05 | 0.58 |
| Essar Oil | 5.17 | 151.55 | 148.95 | 0.52 |
| IDFC | 4.94 | 139.25 | 140.2 | 0.50 |
| Total investments | 57.14 | - | - | 5.76 |
| Cash | 42.86 | - | - | 4.32 |
| Net worth | - | - | - | 10.08 |
| Returns (%) | 0.85 | - | - | - |
| SADANAND SHETTY Vice President, Kotak Securities | ||||
| Top Holdings | % of as | |||
