By Ishaan Thakkar
A value portfolio should be a diversified portfolio with a bunch of 15-20 companies. To identify companies in a value portfolio the following steps are to be considered; spotting, analyzing, evaluating, positioning, and monitoring the companies on a regular basis.
Diversify a portfolio with strong growth prospects, good management quality, and governance, buy a company at a significant discount to its intrinsic value, and hold and track it patiently and constantly. Hatching on to this process will offer opportunities for the investors to snipe a few multi-baggers and eventually see the companies transitioning from small to mid and eventually to large caps.
After reviewing the company on a regular interval, do not hesitate to increase weightage if valuations are attractive considering the future growth prospects at that particular time. However, investors should prudently trim their positions in case the valuations are too expensive at that point of time.
Mistakes one should avoid:
Bad managementHighly leveraged companiesHigh working capital leakageDon’t overpay even for a quality business (as the market always gives the opportunity to buy quality companies at a reasonable valuation if investors wait patiently. So don’t be a hurry to buy at any price)
(Ishaan Thakkar is Fund Manager at Fort Capital. Views expressed are author’s own.)