Saurabh Mukherjea, whiz-kid with Ambit Capital, is successful as a stock picker because he is constantly on the prowl for high-quality stocks which are quoting at reasonable valuations.
Saurabh is already highly regarded for his “Model 10-bagger stocks portfolio”. These are stocks of rock-solid companies that enjoy significant market dominance and ‘moat’ and which can be expected to compound your wealth for several decades to come.
Now, Saurabh and his team mates, Gaurav Mehta & Karan Khanna, have embarked on a mission to discover “value” stocks. To find these stocks, the three ace stock pickers have relied on the “magic formula” devised by Joel Greenblatt.
Joel Greenblatt is the author of the bestseller “The Little Book That Beats the Market”.
To understand what the “magic formula” is all about, we have to turn to equitymaster who have conducted an in-depth study of the subject. Equitymaster explains that the formula involves ranking a universe of stocks based on their return on capital and earnings multiples. They also assure that the formula works because Joel Greenblatt was able to compound his wealth at a phenomenal rate of 40% CAGR which multiplied his wealth 836 times in 20 years.
The details about how Saurabh and his team went about applying the “magic formula” is explained in detail in the article “Indian Stocks Through Greenblatt’s Magic Formula Lens” by Saul Griffith of valuewalk.com.
For our purpose, it is sufficient to note that the application of the “magic formula” has resulted in 24 stocks qualifying for consideration. Out of these, five stocks, namely, Coal India, Bajaj Auto, Tata Motors, HCL Technologies and ONGC have been given the coveted recommendation of “Buy” by Saurabh and his team.