Prof. Sanjay Bakshi, the authority on value investing, and Ian Cassel, the founder of the MicroCapClub, have heaped lavish praise on each other for their respective stock picking skills.
The Prof has written a piece in which he has eulogized Ian Cassel. The Prof complimented Ian for dispensing “wisdom through wonderful tweets”. He also said that he is “overwhelmingly in sync with Ian’s thoughts on investing”. “I think you are doing a wonderful service to the investment community by telling them in a very articulate manner why it make sense to invest with great, yet to be discovered, businesses and entrepreneurs. I love your ideas on illiquidity and inactivity too” the Prof said. The Prof added that he would “love to meet and exchange my learnings” with Ian Cassel. The Prof urged all his fans to follow Ian Cassel on twitter to “learn from his wisdom and experience”.
Ian Cassel reciprocated by paying rich tribute to the Prof’s stock picking ability.
In the interview, the Prof has made several interesting revelations with regard to the ValueQuest India Moat Fund.
The most important one is that the Fund has given a mind-boggling return of 108% since April 2014 (its inception) till 30th April 2015. This is an incredible performance because the Nifty has delivered a meager 15% in the same period.
Prof Bakshi pointed that there are only 11 stocks in the portfolio. The portfolio appears to be equally balanced with the largest position taking up 13% of the assets. He also stated that the weighted average market cap of the stocks in the portfolio is about $600 million (Rs. 4000 crore). This means that all the investments are in small-cap and mid-cap companies.
The Prof described the stocks in the portfolio as follows:
(i) Very high quality of earnings: The aggregate pre-tax ROE of the portfolio is 37% a year;
(ii) Exceptionally strong balance sheet quality: Of the 11 businesses, 8 have no net debt and the most leveraged business has interest cover of more than 3x;
(iii) Highly Scalable Businesses;
The Prof made it clear that he follows the “buy-and-hold” strategy which is shown by the low portfolio turnover ratio of 13%. He explained out that a stock is sold only if the stock is unworthy of investment or if its valuations are excessive.
The other interesting revelation is that the Fund earns a management fee of 1% and a performance fee of 20% over a hurdle of 8%.
The Prof did not indicate the names of the stocks in the portfolio. However, we are free to speculate. Two stocks, namely, Ambica Cotton and Poddar Developers, are known to be a part of the portfolio of the ValueQuest India Moat Fund. The other stocks in the portfolio may be the Prof’s favourite stocks, namely, Relaxo, Thomas Cook, Vaibhav Global and Ashiana Housing.
Can we try to find out all 11?
Ambika cotton
Poddar
Thomas cook
Ashiana
Vaibhav global
Relaxo are mentioned above. Others?
Piramal enterprise?
Eicher and kitex garments
One is kitex
I think Symphony Coolers is also Prof. Sanjay Bakshi’s stock pick. I read it in this blog itself.
Want to clear some misunderstanding here.. $600 million is the average market cap of stocks in the fund. Not the AUM. Seeing positions in companies like Ambika Cotton, Poddar Developers, it is highly unlikely that AUM of fund is Rs.4000 crores.. It may be more like 500-600 crores (ballpark)
I wouldn’t mind trying giving a shot at stocks owned by Prof.
Eicher (Not sure if a current position) , Thomas Cook, Ashiana Housing, Relaxo, Vaibhav Global, Poddar Developers, Kitex Garments, Ambika Cotton
I think there is some position in Suprajit Engineering. But this is my hunch.
Thanks for pointing this out. You are right. I misread “The weighted average market cap is about $600 million” as being the AUM. The article has been corrected.
Aravind, any specific reason why you believe that he holds Suprajit engeneering? I don’t think he has ever mentioned the stock.
His return from 2001 to March 2014 is 25%. This is lower than Pharma or Private banks in the same period. Let not FY 2015 increase of 108% go to people’s head. Also Prof expects only 18% going forward. Read the interview carefully and analyse data.
please look performance for 2011, 2012 and 2013. it is not that great. http://www.trustnetoffshore.com/Factsheets/Factsheet.aspx?univ=DC&fundCode=KXF5I&pagetype=performance
having said that there are lot of things to learn from his tweet and about business. And i think his latest all pick has performed hugely.
Can retail investors participate in the value quest fund? PMS ?
It is only targeted for HNI’s, and the minimum amount is 3 to 5 Cr.
P:S One of my friends dropped a mail to Value Quest and this is what he received in reply.
Mid-Cap Mogul Kenneth Andrade quits IDFC AMC –
http://mybs.in/2RwD3Yn
need to keep and eye. he is one great stock picker.
which is the best PMS provider providing 30% kind of returns, if not more consistently.
No doubt prof bakshi is awesome and i have huge respect for him. Somehow i am not at all convinced about the stock picks. none of them see to have any moat or a good earning visibility. (i mean ambika, thomas cook, poddar, ashiana, vaibhav,piramal, kitex(if he is indeed holding). relaxo may be ok. but again not a strong brand.
slightly off topic: does anybody know the reported return of value quest fund for last year ( 54% or something) is after the profit sharing ( 20% or whatever) or its the absolute profit before profit sharing?
I second to you. I believe most of these stocks are fancied by the market participants especially because Mr. Bakshi has invested. He is very careful to disclose them after a quarter & then sudden spike happens. In fact I have seen this pattern over the years that these gurus let their stock know to retail investors after a while & followers then jump on them. Not only him but many like pornju etc. These guys won’t reveal their true buy price nor they would tell when they got out. So again pigs will be slaughtered. Not their fault as everyone wants to have some piece of cake/pie but this phenomena is on rise now.
he digs in too much before investing in any company. it becomes very difficult for a person who is not from finance background. Investors like Rakesh Jhunjhunwala – I remember in one interview he said at times one should buy first and study later. He was talking about DHFL comparing it to meeting with Aishwarya Rai. One more of similar attitude is Mohnish Pabrai, who has some 90+ checklist which usually is run within 30min. He candidly says if these criteria leads him to excel calculations, he gives it a pass.
Another one of his favorites is NESCO.
nesco is languishing at 1470- 1485, for a while now