Management Q&A

Management Q&A

You can expect around 10-15 ideas from different industries and market cap over a 3 year subscription period.

At AnalyseWise, we are focused on helping you build a high quality PORTFOLIO which can compound your capital at attractive rates over long period of time.

Therefore, instead of simply thinking in terms of number of ideas that we recommend in a year, we are more focused on the quality of those ideas and the value they add to the portfolio.

The investment ideas won’t be distributed evenly across the three years. Rather, depending on the overall market level, we might recommend only 1 or 2 companies when the markets are very expensive.

Conversely, when the market is trading at attractive valuation we might recommend more than 5 companies in a year.

Quality over Quantity is our promise to you!
We view equity investing as part ownership in a business. In the short run, we don’t think one can predict stock prices as they can gyrate due to myriad of reasons unrelated to the business. But over the long run stocks prices and business fundamentals go hand in hand.

Our core competence lies in identifying sound businesses and recommending them at the right price. Our clients appreciate our long term and sound approach to investing. If you are looking for some quick tips, we would advise you to look elsewhere as there is no dearth of such people.

Secondly, we are fully cognizant of the fact that market is a crazy creature. There will be times when it will be in a very optimistic mood and will price stocks at a much higher level compared to the intrinsic value of a business. It will be difficult to find quality and value at the same time in such euphoric market conditions.

By keeping our subscription for a minimum period of 3 years, we AVOID THE TRAP of recommending companies which don't meet our strict criteria of quality and price as we can take a much longer term view on the markets which would have not been possible if we were to provide our subscription for 6 months or 1 year.

At AnalyseWise, we don't just claim LONG TERM, we practice LONG TERM.
Our target compounded rate of return is upwards of 20% over the long term.

Focus on Absolute Returns: We don’t believe in relative performance versus a benchmark. For example if a benchmark like SENSEX is down 25% and we are down 15%, we won’t view it as outperformance.

We focus on delivering positive returns irrespective of benchmark.

Therefore, we don’t shy away from advising our clients to reduce their equity exposure or liquidate it entirely in favor of fixed income when the general market is trading at levels way beyond what the fundamentals warrant - For example in 2000, 2008 and more recently in 2015.

As our focus is to find compounding machines, we are usually willing to hold a stock as long as the underlying business is performing as per the investment thesis and the fundamentals are intact or improving over time. Such a period may last for 5 years or 10 years or even more.

Usually, our minimum investment horizon is three years and there is no upward limit as such and depends entirely on how the business is performing.

We firmly believe in the adage BUY RIGHT, SIT TIGHT.

We believe in concentrated portfolios of not more than 10-15 companies that meet our stringent criteria of quality and price.

Truly great investment ideas are rare and don’t come every month. This results in portfolio with fewer holdings and large positions when compared to conventional wisdom.

Therefore, we prefer to concentrate our efforts on select companies and study them in great depth to ensure that the ones we advise to our clients meet the strict criteria laid down by our firm.

These few companies have a high probability of compounding our client’s capital over long periods of time at attractive rates with limited downside.
We strive to manage risk not by the conventional wisdom of wide diversification but by advising our clients to buy only those companies whose businesses we understand thoroughly through our in-depth primary & secondary research and finally by not overpaying for them.

We believe that the major source of risk in investing does not come from the number of companies one owns but the predictability of the underlying businesses of those companies.

Therefore, we spend a lot of time understanding the structure of the industry, sources of competitive advantage, potential risks to those competitive advantages, growth prospects, management quality and finally the price we are paying.

Overall, our concentrated approach ensures that we do our homework comprehensively and thoroughly without relaxing our standards on any front. We don’t hesitate to pass on opportunities if they don’t live up to our stringent criteria, even by a narrow margin.

We strive for margin of safety, not just from low price compared to intrinsic value but also the quality (moat) and scalability of the business, which causes the intrinsic value of the business to increase year after year at attractive rates.

We advise our clients to buy only when the market price is equal to or below our estimate of company value based on conservative assumptions.
We believe in looking beyond numbers, because not everything that counts can be counted. For example, we avoid companies with weak promoter quality, political affiliations, historical track record of taking minority shareholders for a ride etc.

We meet managements, attend AGM’s, participate in company conference calls to understand the people with whom we are partnering.

We complement secondary research with primary research speaking to customers, dealers, suppliers, competitors to get on the ground feedback.

We don’t use databases to pull financials of a company. We take the pain of taking out the financials manually by going through the annual reports and going through each and every note to accounts. This ensures that we TRULY know what is lying behind each and every number.

We believe our old school approach helps us in uncovering potential negatives or positives which would have been undiscovered had we used a database.

Some of the key things which we look in annual reports are key accounting policies, off- balance sheet liabilities, Inter-Party Transactions, Management Remuneration.

We firmly believe that the DEVIL is in the DETAILS and therefore we go that extra mile to ensure we fulfill our fiduciary duties towards our clients.

Keen observation of products and services: Instead of thinking purely like investors, we also think like customers and generate investment ideas based on what we
    consume, use, and see in our everyday lives
Running a wide range of Quantitative Screens to shortlist a set of companies for further study
Corporate Actions like spin offs, de-merger, buyback, warrant issues etc.
Tracking insider buying