Hot Stocks

Over the last couple of years, the concept of an opportunities fund has caught the fancy of many fund houses. Till 2003, there was just one such fund - DSPML Opportunities Fund. Since then, the brigade of opportunities funds has grown rapidly. In 2003, three such funds were launched, followed by four each during 2004 and 2005. At present, 12 fund houses have an opportunities fund in their product portfolio. Together, these funds currently manage over Rs 5,000 crore worth of assets. Broadly speaking, these funds scout for 'opportunities' of various kinds. It could be a turnaround story, a deep value stock, or maybe a stock which has been beaten down significantly due to some temporary negative news. Therefore, we thought their portfolios could be a perfect haven to search for some interesting stock ideas. What immediately struck us is that these 12 funds lack homogeneity in their stock selection. Between themselves, they had invested in over 220 stocks as per the July-end portfolios. Of these, only 18 are owned by five or more of these funds, while the vast majority of 133 stocks are owned by just one of them. This would lend all the more credibility to our selection from their portfolios. After all, there has to be some substance in a stock which many opportunities funds own significantly, despite otherwise being quite unique with their stock selection. To zero in on this list of elite stocks, we considered a three-dimensional criterion. The first and the most important was obviously the amount of money invested in each of the stocks. We arranged all of these stocks in the descending order of the amount invested in them by the opportunities funds as per their July 2006 portfolios. Then we restricted our list to only those stocks present in the portfolios of at least three opportunities funds. Our final aim was to concentrate only on those in which fund managers have invested with conviction. So we pruned the list further to include only those that enjoy an average allocation of at least 2 per cent of the assets. Our criteria led us to a list of 30 stocks, of which 14 are the constituents of the Sensex. We decided to skip them as they also happen to be the most widely held and popular stocks. In the following pages, we will give you the details of the most prominent holdings out of the remaining 16. Befo