From ‘rokda’ flow in a company to ‘sparring’ partner, Harini Dedia shares investment tips. | Jobs Vox


Please share your first stock and mutual fund choice?

The first stock I picked was Nucleus Software Exports Limited. At that time, A 500 crore market value company. I made money from it, but it was a pure value bet. I didn’t spend enough time understanding the business or the quality of the product.

My brother takes care of my mutual fund investments. To get the benefit of section 80C, I started my first mutual fund investment in Mire Property Tax Savings Fund.

How do you get stock when you pick your value?

The two main areas I focus on are ‘cashflows’ and ‘growth on those cashflows’. I always look for companies that are growing faster than India’s nominal GDP. If India’s nominal GDP is growing at 12%, company’s sales are growing at 13-15%, profit growth at 15-17% and balance sheet improvement cash flow is growing at 17-19%, that’s where I want to be. Being my portfolio.

Money is not in buying and selling stocks, but in mortgages. How long do you prefer to hold portfolio stocks?

The average portfolio holding period I execute is currently over three years. I haven’t sold my first-two investments to my clients yet.

Please share where you can comfortably choose your favorite sectors?

I don’t really focus on one particular sector, rather I like to look at things across the board. However, if I have to name specific sectors – I would say pharmaceuticals and infrastructure. Currently, I see a lot of opportunities in these two sectors, but both are ‘stock oriented’. Both these sectors have many mines and many opportunities.

What is your asset mix?

I have 95% equity and six months of expenses in debt, which is 1% of my net worth. I have gold that my mother gave me in marriage.

Do you invest in international stocks?

When I was in America, I invested in international stocks. I have investments in international stocks through mutual funds, but not any direct equity investments. My brother sees mutual fund investment. I only invest in Indian stocks because I see a lot of opportunities here.

We succeed after making mistakes. Do you have any bugs you’d like to share with our readers?

One mistake I made was investing in Kesar Terminals & Infrastructure Ltd, a company that had good cash flow. Once I met their management at the AGM, I realized that there was a mismatch between what I thought and what the performance should be. I found some red flags, but I still believed in that company. It was a bit sloppy and I hesitated to sell it. That was my biggest mistake — laziness.

Please share an investment strategy that has worked well for you?

Two things really worked for me – one was simplifying my investment philosophy. I spend more time on understanding business, quality of management and buying at the right price. The second thing is having a no-nonsense partner. Before Tamohara, I was running my own small PMS fund. At that time I was living in an echo chamber making mistakes. When I joined Tamohara, I met my savings partner, Sheetal Malpani, the Chief Investment Officer, who stood by me and said I agree with this and disagree with it. We always joke in our office that every Warren Buffett needs a Charlie Munger. Without one and the other, you wouldn’t have the success you have now. Every investor should have a no-nonsense partner.

A strategy that hasn’t worked for me is putting too much hope in people. Sometimes I think as investors we all invest emotionally in a stock we buy even though the numbers are no matter what we believe in them. Caesar was an example of that. And that’s where saving a partner helps. So, if you don’t have the same amount of emotional investment in that company, you can spend a long time and say that’s not true, and you need to take a deeper look at it.

Any portfolio management tips during volatile markets?

At Tamohara, the portfolio strategy has remained consistent. We are tracking companies that have demonstrated the potential to increase their cash flow. We don’t buy any company that we don’t understand the terminal value of that business.

During this time we have prepared two things, one is Tamohara’s checklist, under which to fill this big questionnaire. ‘Has the auditor’s fee suddenly changed?’ It includes questions like Second, we have come up with a scoring system. It’s basically taking our investment philosophy with the checks and balances we want to meet, and trying to turn that into a number. We conduct this periodically on all companies in the BSE 200 and companies we may be interested in investing in.

How do you see yourself as an investor?

When I look at any company, the first thing I try to understand is how “Rokda” enters this business?” I always try to look at each company and investment, strictly from the point of view of cash flow. I focus more on the fundamentals.

What does wealth mean to you?

Wealth to me is absolute freedom. Freedom to take the choice that I no longer want to live in Mumbai. I want to establish my research house in Goa and open a coffee business. Wealth is a matter of freedom where you no longer need to worry about fulfilling your dreams.

Will you move from equity to debt later in life?

My faith in Indian fairness is unsurpassed. My stocks help me get to a level of wealth where I don’t have to worry about debt. And, the only piece of real estate I aspire to own in the future is a house in Goa.

Please tell me about your portfolio returns?

The most accurate way to show my returns is how my family portfolio performed. My parents are my toughest customers. I have been managing my family portfolio since 2014. Every April 1st, my family sits down at a family board meeting and presents the investment report card. 24.3% (approx) is my family’s CAGR excluding dividends. We are a family of six and I handle everyone’s equity portfolio while my brother looks after mutual funds.

As a Tamohara Long Term Equity Strategy, it mainly invests in small and medium-sized companies. Can you please share the name of these companies?

Some of our past winners are Tasty Bite Eatables Ltd and APL Apollo Tubes. Laurus Labs Ltd is another on the list, but we sold it nine months ago. We have focused more on small and medium-sized companies because we feel we can do a different job there.

Also please tell me about multi cap strategy where you invest in large cap companies. How to choose such stocks?

In large caps, our biggest winners are SBI and M&M. One Saturday, I picked up Mahindra’s annual report, and it revealed a lot of changes they were willing to make. So we decided to move that to our list in October 2020. These two big companies have been our biggest winners in the last three years. Investing in large caps is more about discipline.

What is the average number of stocks you target in your portfolio?

We target 15-18 stocks per portfolio per client.

How does your team manage risk?

We employ a risk management team at the company level. So we have a thesis that we have prepared for any company. After buying a company to see if our thesis is playing out, we give ourselves three quarters. If the thesis isn’t playing out, we revisit the company and reassess. “Accept the folly and bow out of the competition, don’t get slaughtered and sit on a big loss that you can’t save,” says Tamohara CIO.

The only risk management tool we have at the portfolio level is if we can’t get the company at our price, we sit in cash and hedge until it’s profitable.

How much AUM do you manage? Has the fund’s AUM grown in 2022?

We had when I joined in April 2021. 160 Crore (Approx.) AUM. He currently manages Tamohara. 300 Crore (Approx.) AUM.

As an avid reader, what books would you recommend for investment?

I like only two books on investment, the rest are repetitions of the same things. So if one is new to the field of investing, watch “One Up on Wall Street by Peter Lynch”. And, someone with a little experience in the stock market can read “What Matters Most by Howard Marks.”

What is your favorite book? What are you currently reading?

Well, my favorite book is fiction. I am a huge fan of Harry Potter. Recently, a book I enjoyed reading was The Swive: How the World Got Modern. Among my favorite biographies is Walter Isaacson’s Leonardo da Vinci. I also love William Dalrymple’s books. I am currently reading a book on the Medici family.

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