'Currently, I'm happy to underperform'

If fund management were as popular as cricket, Rajeev Thakkar would be a household name. In investing circles, though, he is. Beneath a shy demeanour is a reputed fund manager known for his clear, articulate and insightful views on the market. These traits are clearly reflected in our recent interview, as he gives his take on the current market, new-age companies, PSUs and the hugely popular but currently trailing Parag Parikh Flexi Cap Fund. Here is the edited transcript. Can you walk us through your investment framework? How do you decide when and what kind of stocks to add to your portfolio? India differs slightly from other Western markets, particularly the US. In the US market, diverse stakeholders hold a significant stake in most companies. If the CEO is not performing well, activists may step in and attempt to replace the current management. Even if the decision-makers don't prioritise minority shareholders, they will take some action. However, in India, the majority of companies have their shareholdings concentrated in the hands of individuals known as 'promoters'. Now, the promoters could be Indian families, the government in the case of public sector companies or foreign entities in the case of MNCs (multinational companies). These promoters typically own between 50 and 70 per cent of the company, leaving the minority shareholder with limited options. Due to this issue, it is very important to invest in companies where you have faith in the management. Because you cannot do any activism in India and you have to live with what the promoters and the managers do. Therefore, it is crucial to prioritise investing in companies with high-quality promoters and management. The second point is that, despite the positive outlook for various industries at different times, many sectors in India have proven to be wealth destroyers. So, there have been sectors where almost all the companies have gone bankrupt in the past. It's also crucial to avoid sectors with significant volume growth but weak pricing power or intense competition