Agile Strategy

Investment Philosophy

Buy companies with significant and/or rising market share

Have a bias for businesses displaying sustainable growth

Avoid companies with questionable corporate governance

Prefer companies with easy-to-understand business models

Modify portfolio with agility – churn is not bad

Portfolio process

Idea generation

Leverage technology to:
➢ Analyse multiple factors to identify historical cause-effect relationships that can repeat in future
➢ Identify market/sectoral/thematic/stock-specific inflection points and continuing trends
➢ Monitor the state of the broad market using in-house metrics to determine equity allocation
➢ Screen stocks based on fundamental and technical factors

Stock selection

Select stocks with the following characteristics:
➢ Among the leaders in the respective sector
➢ Strong earnings growth prospects, cash generation and ROCE
➢ Low debt and receivables
➢ Ethical management
➢ Institutions/promoters increasing their stake
➢ Sectors/stocks in uptrend and stock showing relative price strength
➢ Preferably not very widely owned

Portfolio construction & modification

Construct portfolio keeping these in mind:
➢ Limits for each sector/segment with emphasis on correlation between them
➢ Risk defined position size
➢ Agile changes in the mix of large/mid/small cap stocks based on market conditions
➢ Exploit liquidity premium by investing in low float stocks in bull markets

Exit position

Exit positions if:
➢ Adverse change in fundamentals (e.g., structural hit to growth, margins etc.)
➢ Red flag(s) hit in risk management process
➢ Better stock (as per portfolio needs) is discovered

Risk management

Stock specific
  • Avoid illiquid stocks to enable smooth entry & exit
  • Avoid stocks that are highly overvalued/extended
  • Avoid/exit stocks where key shareholders are reducing stake in a significant manner
  • Limit stock specific downside; act before small downside turns big
  • Decide on sizing of each position based on risk parameters
Portfolio level
  • Maintain sectoral caps
  • Control total risk of portfolio to limit drawdown
  • Conduct attribution analysis to identify source of out/under performance
  • Staggered building of individual portfolio to mitigate impact of short-term market variations
  • Customized stock allocations to account for market timing; risk remains same for all clients irrespective of market highs/lows