Fund managementprocess
- 1. PPFAS Long Term Value Fund
- 2. Core value investing Buy and hold from a Value Investing perspective Ability to stay in cash for a while
- 3. PPFAS Long Term Value Fund Equity − Buy and hold equity from a Value Investing approach − Both Indian and Foreign Opportunistic deployments in − Cash to futures arbitrage − Delisting / buy back arbitrage − Debt securities − Structures (Capital Protection Oriented)
- 4. “Value Investing” Stock ownership as Business Partnership Partners (Honest & Competent) Great businesses − Entry barriers, high return on equity, less debt, understandable and predictable − Available at attractive valuations 5 Star meal at Udipi rates, not vada pav Typically 20 to 25 businesses owned Low churn & long term holding
- 5. Why overseas stocks? Home country bias De-risking Sectoral opportunities not available here − Innovative IT, Pharma opportunities − Upstream energy Valuation gaps − FMCG Get paid additional 6%! Amazing recent results
- 6. Cash to Futures Arbitrage We saw this in 2007 ; investors who wanted liquid investments and predictable returns Returns then were around 18% p.a. Buy a stock (say SBI) at Rs. 1,000 and sell the same stock in futures at say Rs. 1,010 No risk whether SBI goes up or down in price
- 7. Delisting / Buyback / Open offers Promoter group want to buy shares (forced by regulators or otherwise) Market price of share is known Purchase price is know Time frame is known Acceptance ratio can be estimated Low risk, opportunistic short term funds deployment
- 8. Structures Opportunities come occasionally Conditions − High interest rates − Low volatility in equity prices Advantage − Heads we win − Tails the market loses If market goes down, our capital gets protected, if market rises, we get equity participation
- 9. Asset Allocation Indian Equity 65% to 100% Derivatives (hedge) 0% to 50 % Net Indian Equity 15% to 100% Foreign Equity 0% to 35% Debt Securities & cash 0% to 85% (including hedge) All tax benefits of Equity Scheme apply
- 10. What are valuations like right now? Of late, smaller companies have been unjustly punished leading to valuations in some of them becoming very attractive. Select US stocks (especially in energy, FMCG & IT space) are very attractive. Crude oil, gold and other commodities coming off highs a positive. Excesses of the past will still haunt the indisciplined companies.
- 13. We will be happy to answer any questions you may have......