It is far easier to own businesses than owning stock prices. We are not obsessed with valuation metrics of companies & trying to predict quarter over quarter growth rates / earnings estimates. We prefer to go deeper into understanding the business model & various cycles surrounding them. Attempt is to focus more on the big picture analysis of how a company can evolve & how its business will transform. Once we like the company, entire research runs around 3 major factors.
We prefer having stocks with high margin of safety giving downside protections . We like situations where downside is known & upside is unknown. In general the attempt is to get into a stock where we can double the money in 3 years, and the stock has the potential to be 5x + over a the long term.
We enter the stock with an initial target on it. If the company performance is better than our expectations, the targets are revised upwards depending on the financial performance & outlook at that point of time. If the company performs below the expectations or all the hopes of performance revival are gone, we exit the stock. There is no downward revision in the stock price.
In short there is no fixed price target to claim fame ! We have general expectations about a future price, and these expectations are revised from time to time.
Exiting from each stock has to be an independent decision, irrespective of financial gains or loss.
If we think, that the best is behind the company & market momentum too may not take the company very far from present levels, we simply exit the stock & move on.
Vice versa, if we think that the best is yet to come. We may delay the exit decision and hold on to the position even if the desired target has been reached.
Being full time investors in stocks, we have own research, stock ideas & do not have to make any special efforts on that. Anyone who wishes to access our stock ideas & views can simply subscribe and see what stocks we like at present. Stay updated as we exit these stocks, change strategies, add new ones etc. Subscription business helps us in generating the capital & also establishes a track record in public domain. It shall reap rich dividends as & when we move into fund management activities.
100% of Alpha Invesco’s & company promoters investible capital is always invested in stocks that are accessible to our subscribers & fund partners. In short, we put our money where our mouth is.
You can download SEBI’s investment advisors regulation Here
Registration Details -
Alpha Invesco Research Services Limited (SEBI registration No : INA000003106 ) Valid Till 23rd June 2020
Alpha Invesco acts in a fiduciary capacity towards its clients and is bound to disclose all conflicts of interests as and when they arise. Alpha Invesco does not receive any consideration by way of remuneration or compensation or in any other form from any person other than the client being advised, in respect of the underlying products or securities for which advice is provided.
Know Your Client –
Alpha Invesco follows Know Your Client procedure as specified by the SEBI Board from time to time. We must collect clients risk profile & risk assessment of all clients from time to time. Being an online subscription services provider, we take only basic information as the decision is taken by the client. And Alpha Invesco’s services merely act as a research input for the client.
Disclosures & Conflict Of Interest -
Alpha Invesco invests in securities markets & has interest in all securities it recommends. Alpha Invesco discloses to the client its holding or position, if any, in the financial products or securities which are subject matter of advice. Alpha Invesco ensures that in case of any conflict of interest of the investment advisory activities with other activities, such conflict of interest shall be disclosed to the client. Alpha Invesco does not enter into transactions on its own account which is contrary to its advice given to clients for a period of fifteen days from the day of such advice. Provided that during the period of such fifteen days, if we are of the opinion that the situation has changed, then it may enter into such a transaction on its own account after giving such revised assessment to the client at least 24 hours in advance of entering into such transaction.
We are SEBI registered and are mandated to follow certain guidelines. We do have our own set of rules that we follow for our advisory service.
We make sure that clients are informed in advance as we plan to exit certain stocks. While exiting the stock, we make sure that it is a parallel process along with our clients.
Wrong Stock Selections & Opportunity Cost
We misjudged the evolution of business models, went wrong on timing of certain stocks and ended up getting into value traps / bad companies. This is what we call our ‘Hall Of Shame’. The term is borrowed from Prof. Bakshi. We even have photo frames of these stocks hanging on our office walls. This reminds us of not to repeat these mistakes again, keeps us humble & asserts that markets are supreme and one must never stop learning.
The biggest loss in having these stocks in our portfolio has been the opportunity cost more than the monetary one.
|Prime Focus||June 2012 ( 45 )||July 2014 ( 50 )||10%|
|International Travel House||October 2010 ( 265 )||August 2015 ( 240 )||-10%|
|Action Constructions||May 2011 (42)||September 2014 (35)||-16%|
|Fedders Lloyd||February 2010 ( 75 )||July 2014 ( 80 )||7%|
|Fortis Healthcare||August 2011 ( 150 )||June 2015 ( 175 )||16%|
|Suzlon||October 2011 ( 40 )||September 2015 ( 22 )||-45%|
|Globus Spirits||April 2012 ( 75 )||August 2015 (78 )||4%|
Selling Out Early
We were able to identify these gems at extraordinarily low levels. However we made an error in judging their future prospects & sold out early. These mistakes have not cost us any financial loss but a huge pain when we look behind.
|Stock Name||Entry||Exit||Net Return||Current Price|
|Cera Sanitaryware||Nov 2011 ( 170 )||April 2014 ( 850 )||400%||1700|
|Bliss GVS||July 2011 ( 20 )||July 2014 ( 55 )||175%||170|
|Poly Medicure||December 2010 ( 65 )||September 2014 (300)||362%||423|
|La Opala||July 2010 ( 9 )||Nov 2013 ( 100 )||1011%||485|