David Nadel of Royce Funds is a name familiar to us. He manages the Royce Intl. Small-Cap Fund, which has seven top-quality stocks of Indian companies in its portfolio.
David Nadel has also written an article/ research paper titled “What Columbus Missed: Royce Rediscovers India” (pdf) which gives an interesting perspective about why foreigners are bullish on Indian stocks. In the report, David has explained with great clarity on why the seven Indian stocks in his portfolio have great potential and should form part of every portfolio.
David explained that his fund is a “value oriented” one and that he prefers to pick stocks that have a wide margin of safety. He also likes stocks that have a proven track record with 20%+ ROEs and a 20%+ growth potential. Indian stocks offer that comfort and potential, he added.
Now, in the wake of NAMO’s win, David Nadel has once again reiterated his bullishness on Indian stocks. In an interview to CNN, David Nadel emphasized that NAMO’s win was definitive and that it would translate into positive economic news for India. “It is the beginning of a new era, less red tape, more pro-business administration & decisive approach”.
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David was also impressed by the demographics of India. “The average Indian is only 25 years old, which is several years younger than an average American or Chinese” he said. He also pointed out that India had the fastest growing middle-class population which, over the next decade, would even outnumber the entire population of the USA.
David suggested that the best way to approach Indian stocks is to avoid direct consumer plays, which are very expensive, and instead to take a derivative or ancillary approach and buy stocks that indirectly served the end consumer.
The other interesting point that David made was that the opportunity for banking and financial services in the Country is “fascinating”. He explained that India is a very un-leveraged society, with the household debt to GDP being only 10%, as compared to 80-90% in the USA. He also pointed out that a bulk of Indians did not even have banking facilities. He also said that in 8 years, there would be more people with a $10,000 disposable income in India than in the USA or the Euro Zone.
David Nadel also talked at length about his favourite Indian stocks, AIA Engineering, Shriram Transport, IPCA & Thomas Cook and made great points on why these stocks are great buys for a long-term portfolio.
If you look at the matter from the perspective of David Nadel and in the context of the great win by NAMO, you will realize what a great opportunity awaits us. We need to grab this opportunity with both hands and aggressively buy top-quality stocks (see also This Will Be The Biggest Mother Of All Bull Markets Of My Lifetime: Rakesh Jhunjhunwala & How Long Will The Stock Market Rally Last? What Stocks To Buy? Saurabh Mukherjea, Ambit Capital, Explains).
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