Anoop Bhaskar Stock Picks & Investment Strategy

Forbes India has a nice write up on how Anoop Bhaskar managed to get UTI Mutual Fund to outperform its peers despite the several hurdles he faced.

Anoop Bhaskar got interested in stocks in 1986 when he started investing in IPOs like Hero Honda and HDFC and made a lot of money out of them. He set his heart on becoming a fund manager and after working with other funds, he got his big break when he joined Sundaram Mutual Fund. He was put in charge of the Sundaram Select Midcap Fund. His credentials as a star stock picker were established when Sundaram Select Midcap Fund gave a return of a splendid 61 percent annually as compared to the benchmark return of 44 percent over a four-year period from July 2003 to April 2007. Under his stewardship, the AUM of the Sundaram Select Midcap Fund surged to a mammoth Rs. 2,500 crores.

While at Sundaram, Anoop Bhaskar noticed that stocks of top-quality companies were quoting at dirt-cheap prices and he took full advantage of that. He bought 1 percent of Blue Dart at Rs 70 and sold the stock at an average price of Rs 1,600 over the next three years, making huge multibagger returns. He also bought realty stocks like Ansal Properties and Unitech and construction stocks like IVRCL in a big way and made huge multibagger profits of over Rs. 100 crore from them.

However, the important point is that Anoop Bhaskar sensed that the shine was going out of the infra and realty sectors and bailed out in time. If he had held on to the stocks, as many of his peers did, all those profits would have turned into heavy losses.

Another example of Anoop Bhaskar’s brilliance is when in December 2010, he sensed that the environment was getting hostile for banks and benign for FMCG stocks. He took a tactical call to buy consumer stocks and reduce the weight in banks. His fund, the UTI Opportunities Fund, went overweight in FMCG stocks and underweight on bank stocks. That was really a splendid call because FMCG stocks have consistently delivered block-buster returns since then.

Top Holdings of UTI Opportunities Fund as of 31st May 2013

If you look at Anoop Bhaskar’s technique for buying stocks, it is really quite simple. He is only interested in companies with high returns on capital employed and strong cash flows and prefers companies where the promoters own at least half the stock.

The other point is that Anoop Bhaskar is not much interested in experimental stocks and prefers to put his money in blue chips and trusted war horses. In fact, in an earlier interview to Businessline, he made it clear that he preferred to invest in companies with stable earnings, even if their valuations were expensive. So, his portfolio comprises of well known stocks like ITC, Crisil, Sun Pharma, Tata Motors, HDFC, HDFC Bank, ICICI Bank, Maruti Suzuki, Supreme Industries, IndusInd Bank etc. Interestingly, banking stocks now have the highest sectoral weight in the portfolio. In an interview to ET, Anoop Bhaskar made it clear that apart from banking, Cement is the sector where he had the highest overweight vis-a-vis the benchmark weight, as he felt that the government would increase spending on rural housing and roads during the pre-election year. As a corollary, the fund is also overweight on autos, a sector which would directly benefit if rates soften, he said.

The only flaw in Anoop Bhaskar’s technique, if one can call it that, is that he is strict about allocations. So, even if a stock is giving super-duper returns, he prefers to sell it away only to ensure that the weightage does not tilt. But, this has met with adverse consequences because though he homed in on ITC and bought a big chunk of it at a low rate, he sold it only because its price & weightage in the fund increased. If he had held on to his large holding in ITC (as he was allowed to do under SEBI regulations), the fund would have given even better returns.

Anoop Bhaskar explained his philosophy in pithy words: “I don’t want to run concentrated portfolios because you become a prisoner of it over a period of time”.