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Going Against the Tide

In an interesting trend, mutual funds are lapping up the shares of some loss-making companies

At Value Research we keep tracking various aspects of mutual funds. This time our inquisitiveness made us check out the contrary bets of mutual funds in the last one year, since the time the market started to rally. We have extracted the companies which are loss-making for the last two years but have still found place in mutual fund portfolios. These companies have witnessed substantial stake-buying from mutual funds in the last one year. It is noticeable that most of these contrary bets have given very high returns as well, perhaps due to a prospective improvement in the companies' fortunes.