If there is one field where women are excelling and ruling the roost, it is in stock picking. We have already seen Dolly Khanna, Renuka Ramnath, Tabassum Inamdar, Neha Majithia, Vineeta Mahnot and Astha Jain stun us with their winning stock picks. Now, Nandita Agarwal Parker of Karma Capital has joined that long list of savvy investors.
After her MBA, in 1994, Nandita joined Bear Stearns & Co as “India market strategist”. It is here that she mastered the art of finding winning stocks and that too in an Indian environment.
In 2003, Nandita felt confident of starting off on her own and she set up her own hedge fund called “Karma Capital”. This fund is supposed to be “the first India-dedicated fund”.
Not surprisingly, Nandita was able to attract big-ticket investors like Toby Coppel, co-founder of venture-capital firm Mosaic Ventures and Grossman, who manages $150 million as founder of Union Avenue Advisors LP. Funds also flowed in from family offices, funds-of-funds and Silicon Valley investors.
Nandita has lived up to expectations by getting Karma Capital to be the “best-performing India-focused hedge fund” over 10 years with an annualized return of 15.58% over the past decade as of September 2014 (according to Eurekahedge Pte).
Nandita can be described as a “value investor”, looking for stocks that have fallen out of favour owing to temporary reasons.
Nandita explains that her investment philosophy is to “look for unloved stocks and analyze why they are sitting at that price. Then we look into what will cause a change and if the management understands what it needs to do to derive a higher valuation.”
She adds that “The focus is on finding stocks with asymmetric risk-reward characteristics, and arbitraging valuation anomalies within sectors of the market. We often take contrarian views.”
A good example of her contrarian approach is her buying a truckload of PSU banking stocks like State Bank of India and Indian Bank in mid 2013. At that time, PSU Banks were available at throwaway valuations owing to the high interest regime and the surging NPAs.
In hindsight, the picks were brilliant because the stocks were in such doldrums that the downside was limited. Also, a slight whiff of good news would send the stocks spiraling up.
It may be recalled that a number of savvy investors like Tabassum Inamdar of Goldman Sachs had in fact sent out the clarion call at that time that “The time is ripe to buy PSU Banks”.
Since then, SBI is up 60% while Indian Bank has nearly doubled.
Two other masterful stock picks of Nandita Parkar are Bata India and PVR Ltd, both of which have given Karma Capital multi-bagger profits.
Now, the best part is that Nandita intends to capitalize on Namo Mania and has big plans to raise nearly $500M (INR 3000 Cr) over the next three years. Her game plan is that foreign investors, especially the Japanese investors who’ve been charmed by NAMO, will want to bet on the expected “multi-year” bull run by pumping in billions of dollars into India.
Interestingly, Nandita Parkar has stated that the “Media and entertainment” is her favorite sector because she believes it “is on the cusp of change due to digitization”.
We must remember that stock wizards Rakesh Jhunjhunwala, Ramesh Damani and Radhakishan Damani have already bought truckloads of TV18 Broadcast and TV Today Network on the same premise that “digitization is a game-changer“.
We need to consider positioning ourselves in these stocks as well, if we haven’t already done so.