We would like to own businesses that we are comfortable with even in bear markets, says Vinit Sambre, fund manager, DSPBR Micro Cap
Vinit Sambre, fund manager, DSPBR Micro Cap Fund, talks about following a buy and hold strategy while constructing the portfolio of the fund.
What is your investment universe?
We define Micro Cap as companies which are not part of the top 300 companies by market capitalization. The mandate of the Micro Cap Fund is to invest minimum 65% of the assets in this category.
What attributes should a stock have for it to become a part of your portfolio?
We use bottom up stock selection while managing the fund. We pick companies which have great management, generate free cash flows, decent long term ROCEs and competitive advantage. We follow a buy and hold strategy. We also look at some cyclical businesses which are at the cusp of turnaround where ROCEs are slated to move up in the foreseeable future.
What kind of stocks never enter your portfolio?
Broadly the stocks which do not meet the above attributes will never enter the portfolio. Further since we follow a buy and hold strategy we would like to own businesses which we are comfortable owning even in a bear market.
What will you attribute the relatively superior performance of your fund to in recent years?
We can attribute the performance to the pure fundamental approach for stock selection which we have been following.The stock selection method is quite rigorous and our aim is to own superior companies, within each sectors. We have seen significant divergence in performance between two companies operating in same sectors and which can be explained by the fundamental attributes as mentioned above. If we are able to identify these companies ahead of the curve it leads to superior performance.
Is there any tactical miss you regret (for instance, not owning a stock or not owning enough of it)?
We have seen a few disappointments over time but we try to learn from each of them so that it can be avoided in future.
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