Indians excel in United States Investing Championship 2020
It is a fact that Indians excel in whatever field they take up.
A striking example of this is the fact that persons of Indian origin are CEOs of some of the biggest conglomerates in the World.
Names like Sundar Pichai (Google), Satya Nadella (Microsoft), Rajeev Suri (Nokia), Sandeep Mathrani (WeWork), Indira Noori (Pepsi) come readily to mind.
This situation is true even on Wall Street.
A casual perusal of the list of top performers in the United States Investing Championship 2020 reveals the names of several persons of Indian origin such as Anish Sikri, Vibha Jha, Alok Bhatia, Rohan Sahani, Manoj Panda etc who have raked in impressive gains from investments.
No doubt, these individuals deserve to be complimented for keeping the Indian flag flying high on Wall Street.
Matthew Caruso is at the top with a return of 426%
The Championship is a prestigious event. Its prior participants include legendary traders such as Paul Tudor Jones, Mark Minervini, Louis Bacon, Edward O. Thorpe, Mark Strome, David Ryan etc.
The purpose of the competition is to uncover rising financial stars, and help them rapidly attract new investors.
The participants receive enormous coverage from all major financial publications.
Matt Caruso is at the top with 426% return.
Tomas Claro came second with 409% while Oliver Keil came third with 388%.
Anish Sikri came fourth with a return of 253%.
To put the performance of the Champions in perspective, the S&P 500 has gained only about 8% year to date.
US Investing Championship(real money competition) Sept results are in. Finally in 1st with +426.2% YTD. September was a difficult month given the steep 13% drop in the Nasdaq. I'm glad to have been able to add to profits. Last Qtr of the year left to go https://t.co/hatUVAemDG pic.twitter.com/2wgZjfBE3S
— Matt Caruso, CFA, CMT (@Trader_mcaruso) October 14, 2020
William O’Neil’s CANSLIM strategy is the secret formula for success
Matt Caruso candidly admitted that the secret of his success lies in William O’Neil‘s famous CANSLIM methodology
“I use his methodology as my base, my core and have supercharged it with a lot of the different training techniques over the years to kind of really control my risk as much as possible but still deliver a lot of upside,” he added.
Caruso revealed that he is very allergic to losses.
Though O’Neil recommended jettisoning the stock if it loses 7%, Caruso bails out at only 3%.
Conversely, when a stock turns out to be a winner, Caruso holds on tight to it.
“If you go up 20% in the first three weeks, you should hold for eight weeks,” he said.
If a stock breaks out but there is no follow-through or strength in movement, Caruso hits the exit button without hesitation.
“I live and breathe markets,” he said. “It’s all I do.”
Caruso also opined that the advice offered by old-school pundits to buy “good businesses” and hold them forever may be flawed.
This is because what is a “good” business today may turn out to be a “bad” business tomorrow owing to the rapid changes in technology.
Instead, the viable strategy is to ride the tide by staying with stocks that are surging and dumping those that are plunging.
“The only good stock is a stock that goes up. Risk control, always,” he advised.
On big up days I always see the tweets "Just buy and own good businesses". In 1999 fiber optics were a great business, a year ago some airlines/hotels were a great business. You never know what can come along. The only good stock is a stock that goes up. Risk control, always
— Matt Caruso, CFA, CMT (@Trader_mcaruso) October 7, 2020
What is the CANSLIM strategy?
The CANSLIM strategy appears to be quite easy to understand and implement.
Essentially, the strategy implements a “techno-funda” approach in which stocks with strong fundamentals with strong technical indicators are identified.
Under the strategy, a stock becomes a ‘Buy‘ if it satisfies all the following conditions:
|C: Current quarterly earnings of the company||The Company should have growth of at least 25% and there must be earnings acceleration over the last three quarters|
|A: Annual earnings growth||There must be annual earnings and sales growth of at least 25% for the past three years and a return on equity (ROE) of more than 17%|
|N: New product, service or management||There must be new products, new services, new leadership, new pricing or a new condition in the industry|
|S: Supply and demand||The demand for the stock must be high while the supply is low. Institutional investors must be interested in the stock|
|L: Leader||The Company must be a leader in its segment|
|I: Institutional sponsorship||Institutional investors must be interested and have a stake in the Company support to fuel its price movement|
|M: Market direction||The stock must trade in sync with the market|
The best part of the strategy is that we don’t have to worry about whether the stock is ‘cheap‘ or ‘expensive‘.
How to find the best Indian CANSLIM stocks?
Naturally, the question will arise in the mind of every discerning reader as to how to find the best CANSLIM stocks for the Indian stock market.
One way is to follow the advice offered by MarketSmith India. The website conducts detailed research based on the CANSLIM methodology and identifies the top 30 Growth Stocks.
Mayuresh Joshi, the head of research of MarketSmith India, periodically recommends the best stocks on TV.
In his latest interview, he has given cogent reasons why stocks like Balkrishna Industries, PI Industries, KPR Mills etc fulfill the CANSLIM strategy and are good buys at present.
MarketSmith has also issued a detailed booklet of the best stocks which includes names like Alkyl Amines Chemicals, Mas Financial Services, Berger Paints, Deepak Nitrite etc (Download pdf file).
Another solution is to clone the Small Case basket of CANSLIM-esque stocks.
These are said to be efficiently managed growing companies experiencing positive momentum, screened using CANSLIM methodology.
The Small Case has given a CAGR return of 31.45% which is impressive by any standards.
According to the latest data, the following stocks are the best CANSLIM stocks to buy now.
|Latest list of India CANSLIM stocks|
|Advanced Enzyme Technologies||Specialty Chemicals|
|Fine Organic Industries||Specialty Chemicals|
|Neogen Chemicals||Specialty Chemicals|
|J B Chemicals||Pharma|
|Muthoot Finance||NBFC/ Finance|
|PI Industries||Diversified Chemicals|
It is notable that the stocks in the Small Case Portfolio of CANSLIM stocks are properly diversified across several sectors.
Also, there is proper allocation between the large-cap, mid-cap and small-cap stocks.
Yet another solution, assuming one wants to be a free-loader, is to check the list of CANSLIM stocks at screener.in.
Some kind soul has done the homework and cherry-picked stocks that meet the criteria.
The list comprises of well-known names such as Hawkins Cookers, Sonata Software, TCS, L&T Technology, Metropolis Healthcare, TCI Express etc.
No doubt, the list is quite impressive and full of fail-safe powerhouse stocks!