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The Stars & The Underdogs

The outperforming stocks found little mention in fund managers’ lists

Recovery might be too strong a word, but the stock market did catch most investors napping when it did a turnaround in March 2009. We looked at the portfolios of diversified equity funds and tax planning funds between March 9, 2009 and August 31, 2009. And we found that the stocks that rallied the most were not listed amongst the favorites of these fund managers.

Though the BSE 500 as a whole went up by 102.63 per cent during this period, its top 10 stocks were up by an average of 496 per cent. If you find that mind boggling, check out the return of Hindustan Oil Exploration, which was the best performer with a return of 736 per cent. Yet, this stock was almost overlooked by the diversified equity and tax planning funds. It was only in August that HSBC Progressive Themes bought 2.7 lakh shares of the stock. IL&FS Investsmart, Jindal South West Holdings and Unity Infraprojects found themselves shunned by fund managers too.

Sundaram BNP Paribas Select Midcap had been betting on Himadri Chemicals way back, since December 2007 and kept its exposure intact regardless of market gyrations. This stock caught the eye of the fund manager at ICICI Prudential Emerging STAR and began to make an appearance in its portfolio from June 2009 onwards only to get offloaded in August.

Ahluwalia Contracts was noticed by ICICI Prudential Indo Asia Equity way back in October 2007 and the fund currently owns 4.2 lakh of its shares.

Since the start of 2009, Sterlite Technologies found just one taker — ICICI Prudential Dynamic. By April, two funds from the Birla Sun Life stable bought into it. Now seven funds have invested in this stock with ICICI Prudential Dynamic being the largest investor with 8.4 lakh shares.

Seven funds had bet on infrastructure company Mcnally Bharat Engineering, even before the rally started with Sundaram BNP Paribas CAPEX Opportunity leading with 7.9 lakh shares (February 2009). It  booked profits in between and now holds 8.5 lakh shares, but is still the largest amongst the 11 funds that invested in this stock, followed closely by Magnum Emerging Businesses at 3.3 lakh shares.

Nine funds were invested in Madhucon Projects at the start of the rally, but there was hardly any other significant activity on that counter other than Tata Pure Equity selling off its holdings of 1.06 lakh shares and UTI Midcap buying 1.19 lakh shares in May 2009. Throughout the rally, Sundaram BNP Paribas Select Midcap has been the largest shareholder among the funds with 11.98 lakh shares.

Aban Offshore, which was the second best performer and the most popular, was held in the portfolios of 16 funds at rally’s start. Despite its popularity, it never cornered huge allocations initially. Magnum Global held the maximum number of stocks (1.6 lakh shares) at the beginning of the rally. But in March 2009, Sundaram BNP Paribas quickly latched on and picked up 7.8 lakh shares for two of its schemes.