On the other hand, the benchmark equity index NSE Nifty gained nearly 17 per cent during the same period. We caught up with Anuj Jain, research head and co-founder, Green Portfolio to understand the investment strategy.
A small portfolio management scheme has been buzzing among investing community due to its superlative returns in the past one year. That too when the domestic equity market remained volatile due to sustained outflows by foreign institutional investors (FIIs) and rising concern over inflation. This is Green Portfolio’s Super 30 strategy.
The latest data available with PMS Bazaar showed that the scheme has delivered a 146.30 per cent return to investors in the past 12 months till April 30. On the other hand, the benchmark equity index NSE Nifty gained nearly 17 per cent during the same period. We caught up with Anuj Jain, research head and co-founder, Green Portfolio to understand the investment strategy. Edited excerpts.
Business Today (BT): How has Super 30 managed to deliver robust returns to investors in the past one year? Throw some light on your investment strategy?
Anuj Jain: In ‘Super 30 Dynamic’ scheme, investment strategy revolves around the theme of turnaround stories, re-rating potential and special situations like mergers and acquisitions (M&A). These events may include tailwinds in the stock due to government policies, change in business model, change in management via acquisition or merger, repayment of the debt, demerger and sale of assets, among others.
When a sense of big opportunity in the stock is anticipated, a deep dive into other parameters of fundamentals and valuation is undertaken. Besides looking at how effectively the company will tackle the rerating event, we also look into the management experience in the industry, its integrity, competitive advantage, and how it has performed in the downturn.
We also see if the company has done what they have guided in the past, its past performance history, dividend history, the health of its balance sheet and the realisation of profits shown in P&L and so on. So, when the entire parameter is met, the stock is added to the Super 30 portfolio.
As with any portfolio, not all of the shares perform in one go. As such special situation events may take time to materialise. Or in the worst case, such events may never take place. For example, we were holding BPCL for last over 1 year with the hope that after Air India, the government will be able to privatise it. However, now it has been confirmed that the entire exercise was unsuccessful and so was our wait with the share. Hence, we want the reader to understand the high risk and high return nature of the strategy.
BT: What is the sector composition of the scheme? Can you name the top five sectors with their weightage?
Jain: As of April 30, 2022, the chemicals sector (20.32 per cent) held maximum weightage in the portfolio. It was followed by healthcare (13.80 per cent), textiles (12.05 per cent), automobiles and ancillaries (8.47 per cent) and telecom (5.84 per cent).
BT: What often do you churn the portfolio?
Jain: We don’t churn our portfolio frequently; all our stocks are bought with a mindset of a minimum period of 1-3 years investment horizon. However, since there is an underlying situation, this may fructify in a shorter period also. However, 1-3 years is a fair holding period for this scheme.
Any share that we are entering into the scheme is with an expectation that it will give multibagger returns. We are not the guy who would buy for 10-15 per cent returns.
BT: Can you name some stocks which have delivered multibagger returns in the recent past?
Jain: We have been holding Precision Camshafts (already over 3 times return, but we are still holding.). However, we have exited players like Shiva Cement, RattanIndia Power and Rama Phosphates in 2021 with over 100 per cent gain. We also exited Shree Renuka Sugars with over 2 times profit. Of late, we entered Avantel in the second half of FY22.
BT: Coming to the domestic equity market, which sectors do you think will deliver lucrative returns to investors?
Jain: Specialty chemicals, pharmaceuticals, textiles, automobiles (EVs, commercial vehicles) and contract manufacturing are some of the sectors that can deliver a lucrative return to investors due to positive developments in these sectors like incentives given by the government through the PLI scheme and shifting of manufacturing base to India because of China+1 sentiments. Atmanirbhar Bharat is a visible commitment from the government. We are following it very closely.
If we talk about other sectors, we are bullish on sugar. Government has an ambitious target of blending 20 per cent ethanol with petrol by 2025. Many sugar companies have already announced their capital expenditure plans to benefit from it. We believe the sector can give a healthy return to investors going ahead.
BT: What is the AUM (assets under management) size of Super 30?
Jain: As of April 2022, AUM size of Super 30 was Rs 11.20 crore.