Stallion Asset is a SEBI Registered (INP000006129) Portfolio Management Services following growth investing as its core philosophy. They started as a research analysis company and have become a portfolio management company due to consistent performance on their research analysis services which helped their clients to successfully & consistently beat the market. They are specialists in buying high quality midcap companies that are often ignored by the analyst community. Their unique investment philosophy of catching the trend and managing the risk has been back tested and they are aiming of creating 25% plus CAGR returns for their clients.
Amit Jeswani (Founder & CIO) – Jeswani has successfully completed his Chartered Financial Analyst (Virginia, USA) and Chartered Market Technician (New York, USA) certifications. A graduate in business with finance from Kingston University, London, he has been investing in the capital markets from the last 13 years, having started at a tender age of 16 alongside his father who was a stock broker. With humble beginnings, he started Stallion Asset as a Research Analyst firm, and with the trust of his clients, Stallion Asset has scaled up to become a Portfolio Management Service Firm.
Stallion Asset-Core Fund – It is a multi-cap portfolio which was started on 22nd October, 2018 and has an AUM of approximately Rs. 254.84 crores. It is primarily meant to generate capital appreciation over medium and long term by investing in Indian equity markets.
They focus only on 4 sectors – consumer, financials, consumer tech and pharma. They invest only in asset-light businesses which don’t need capital to grow and in companies that can reinvest all free cashflows at high ROIC which they consider to be a strong competitive advantage.
They typically avoid commodities, companies that don’t have a recurring revenue or get revenues from government/project business and companies with growth rate less than cost of capital.
To provide the clients with a structure that can achieve preservation and growth of their capital, the portfolio manager shall endeavour to apply his professional expertise in order to help the clients achieve their goals. However, the clients agree and acknowledge that while the aforesaid is the objective, there is no guarantee that the objectives will be achieved nor there is any guarantee of any returns or of there being no capital loss.
The proposed strategy would be to follow a combination of top-down and bottom-up approach for picking stocks and sectors and construct a diversified portfolio of the top conviction ideas.
The portfolio has given an annualized return of 31.39% sine the inception date (22nd October, 2018).
* Plan A & B are not clearly explained.
- Buy and Rotate Strategy beats Buy and Hold strategy.
- Every Bull Market has a Different leader; they find the leader in every bull market and stick to it.
- There is No Bull Market without Earnings Growth; they always buy sectors with high expected sustainable growth of more than 20% for next 3-5 years.
- Winners of Previous Bull Market will not lead the next bull market.
- They prefer buying companies that are making 52week Highs, rather than new 52week lows.
- The more the market believes in the longevity of growth, the more valuations the stock get. Longevity is often the mispriced portion in Capital markets.
Their investment is based on the ‘best of 3 styles’:
Core stocks – 40-60% weight
Trends – 40-50% weight
Special situation – 10% weight
- The core portfolio focuses on 4 Ms – Market leadership, Management, Market opportunity and Margin of safety. They don’t use PE ratios, instead they focus on capital allocation and distribution.
- The trend portfolio is totally based on their investment philosophy. They allocate 40-50% of the weight to invest on the basis of their philosophy which is eventually based on trend analysis.
- They allocate 10% of the weight to invest in according to special situations like the following.
- Change in Promoter from Indian to MNC
- Large Change in Regulation
- Valuation + Earnings Re-Rating is the goal
- Upside expectation of 3-5x in 3-5 years
- Demerger of a Great division
- Growth Rate, Business Quality & Management Quality play a role
- Downside risk limited (mostly protected by cash or open offer)
Their investment style is to generate capital appreciation over medium and long term.
They focus only on 4 sectors because they believe that their financials & consumer tech part of the portfolio should ideally create alpha in a bull market, whereas their consumer & pharmaceutical basket will protect them during the bear market.
They use a combination of core portfolio, trends portfolio and special situations portfolio because they believe that while a core portfolio works well in a bear market, it typically underperforms in a bull market, a trends portfolio works well in a bull market but typically has larger drawdowns in a bear market and a special situations portfolio might have opportunities sometime & be in cash otherwise. They believe that their portfolio of core + trend + special situation will not only lower the portfolio volatility but will deliver decent returns.
Amit Jeswani talks on wealth creation for the next decade with growth investing.
Jeswani says that the 4 sectors their portfolio focuses on, will create the largest market cap in the next decade.
Amit Jeswani – “Perspective of the Portfolio Managers & strategies on COVID19”
Jeswani believes that the game is going to shift towards consumer utilities. He also hints that the Fed printing money may mean that a bubble is going to happen.
You’ve mentioned in many of your media interactions and also on your website that light-asset consumer businesses don’t need capital to grow. Can you elaborate on this?
You focus only on 4 sectors – consumer, financials, technology and pharmaceuticals. You also said in a video on pmsbazaar’s YouTube channel that you think that these 4 sectors will create the largest market capital in the next decade. What do you base this analysis on?
Can you explain the plans A & B of the portfolio fee structure?
According to you, what type of investors should choose this portfolio?
Prepared by Preet Malde