All Posts By

Rohan Samant, CA

Return Vs. Risk

Returns vs. Risk – The Unexpected Side

By | Drivers of Equity Returns | No Comments

While evaluating performance, a lot of attention is given to returns while ignoring the risk taken to achieve the returns. Investors have limited control over the quantum of returns they can generate. But certainly, they have more control over how much risk they are willing to take. It is commonly believed that by taking higher risk you would generate higher returns. But investors are not “entitled” to higher returns just because they take higher risks. Read More

Drivers of Equity Return - Valuations and return expectations

Investing: Are You Playing on a High-Scoring Ground or a Low-Scoring One?

By | Drivers of Equity Returns | No Comments
If you follow cricket, you would be aware of terms like “high or low-scoring ground or pitch”. Some cricket grounds are known to be favourable for batsmen and on an average, these grounds help deliver high scores while others are known to be low-scoring grounds.

Similarly, in investing we believe valuation at the time of investing is an important variable that determines whether you are playing on a high-scoring ground (high average expected returns) or a low-scoring ground (low average expected returns).

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Holistic Approach to Identify High Quality Business

A Holistic Approach to Identifying Quality Businesses

By | Investment Insights | No Comments

The advantages of focusing on quality cannot be understated. By investing in quality you significantly reduce the probability of permanent loss of capital.

And since the business is strong, the long term returns are far superior to average quality businesses. Thus investing in quality is the perfect recipe to generate superior risk adjusted returns. But quality has become a generic term today when it comes to investing. No investor would tell you that they don’t invest in quality stocks. But the definition of quality is different for everyone and one might even say that quality is often in the eye of the beholder.

Rather than debating on the various definitions of quality we would like to discuss how we look at quality in Multi-Act.

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What are the Valuations Telling us about the Market

What are the Valuations Telling Us about the Market?

By | Drivers of Equity Returns, Global Equity | No Comments

Benjamin Graham had introduced the concept of a mythical “Mr Market” to describe how sentiment or emotions drive markets in the short term. His analogy cautioned us in getting swayed into making an incorrect decision because of Mr Market’s emotional make-up. Mr Market is prepared to make us an offer to buy or sell a piece of a fractional ownership in common equity every day. In doing so he indirectly informs us about the assumptions on growth (in sales or earnings) that are being built in the valuations. In a strong bull market these assumptions might be overly optimistic and vice versa in case of a bear market. The choice to transact at a particular price (and valuation), Mr Graham tells us, is ours.

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Investor thinking about how long to stay invested

How Long Should You Stay Invested?

By | Investment Insights | No Comments

There is a lot of literature out there on investing that mostly focuses on buying decision. However, you would find very limited discussion on what to do once you have bought i.e. when to sell. Possibly the reason for it could be there is no correct answer to this question. We would like to approach the sell decision through a different route. Thus rather than focusing on when to sell we would like to address this by answering the question – How long to stay invested? We believe if we try to bring in a disciplined approach to our sell decision in addition to the buy decision, we would avoid the behavioural pitfalls that most investors have to go through.

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Valuation of Indian market based on Warren Buffet indicator

What is the Warren Buffett Indicator telling you about the Indian Market

By | India Equity | No Comments

Back in 2001, Warren Buffett had talked about the Mcap to GDP ratio as probably being one of the best measures of valuation. On a top down basis this is one of the indicators that he tracked to identify extremes of market irrationality. Like all valuation indicators there certainly are limitations to the measure. And in pursuit of perfection one could make multiple adjustments to make the measure more robust. But as Buffett puts it “On a macro basis, quantification doesn’t have to be complicated at all”.

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Post-Election: Insiders Vote Out

By | India Equity, India Macro | No Comments

India’s corporate sector and its leaders were very impressed as the current government took reigns at the centre on the back of reforms it had set out to achieve. However, a review of the current scenario suggests that things haven’t changed much on the ground. Essentially, the rise in share prices of a majority of companies in the last year have been driven more by valuation re-rating than actual improvement in earnings. Likewise, there is an interesting set of data that is emerging in terms of the shareholding pattern across companies. Read More

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Why are the MNCs still putting their money in India?

By | India Equity, India Macro | No Comments

Caught in the middle of political uncertainty, market volatility and fickle FII flows, investors in the Indian stock market could take their cues from the investment behavior of multi-national corporations (MNCs). More than two dozen MNCs operating in the country have ignored all political and the economic instability issues to increase the size of their domestic investments. This, more than any rhetoric, indicates a high degree of confidence in the India growth story.

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Portfolio Management Services (SEBI Registration No. INP000002965) are offered through Multi-Act Equity Consultancy Private Limited (CIN: U67120PN1993PTC074692), which is a wholly-owned subsidiary of Multi-Act Trade and Investments Private Limited; Investment Advisory Services (SEBI Registration No. INA000008589) are offered through Multi-Act Trade and Investments Private Limited (CIN: U65920MH1997PTC109513).