Focus | DNA Investing
Our investment philosophy hinges on investing in businesses / managements having strong DNA to perform better than industry over long period of time
Creating Long Term Sustainable Wealth for Our Investors Through Prudent Equity Investing
Our Investment Philosophy is to take a DNA – Focused approach to investing in a few good quality strategic stocks that have high growth potential. We are huge admirers of the FOCUS investing principle, and have closely observed and emulated the strategies used by its proponents like Warren Buffett and Charlie Munger.
We believe that success in investing depends on choosing the right stock to invest, buying it at a reasonable price and staying invested for the right amount of time. By applying a DNA approach to investing, we invest in businesses that have a sustainable edge over the competition; we look for great innovative promoters/ managements that drive business growth ahead of industry in good and bad times.
A most desired investee company for us is a ‘small fish in a big pond’; a company that has potential for sustained high growth while maintaining superior financial quality. Another set of investable companies for us are those that exhibit above qualities and are at the cusp of turnaround from a temporary lull in business. Such turnarounds have generated immense wealth for us in the past.
Aims of DNA Investing
Capital Protection
It is our endeavor to provide the best possible opportunities to create wealth out of investor’s investment. Risk and reward go hand in hand, or so they say! We believe that a risky investment is not necessarily the best, neither is it always the highest paying investment you can find. On the contrary, we like to minimize risk by evaluating the best fit among risk and return and deployment of the strategies which minimizes the risk and maximizes the returns.
Consistent Good Growth
InvesQ lays emphasis on the need of a company to be well performing in the market (positive cash flows, and upward and continuous growth prospects). We apply this principle to every stock that we pick. We do this by evaluating past performances and factoring in future growth opportunities.
Positive Return Potential
InvesQ steers away from “quick rewards” by focusing on stable yet solid growth potential. Our investment objective is to achieve a medium to high level of returns by choosing those that have favourable potential to grow in medium term.
Deep Rooted Research Processes for Robust Investment Decisions
Successful stock picking banks on the premise that you buy the stock for lesser than what it is worth. That way you buy low and exit high. This is the simple logic to making successful equity investments. This strategy though simple is not as easy as it sounds. We have a multifold approach through which we research a stock (or rather, company whose stock we’re choosing). All our stocks undergo a stringent test for financial soundness and are carefully and judiciously researched.
We have a team that studies each stock for historical performance, analyses its fundamentals and applies well established checks (ratio, value investment principles, MOAT identification. GARP yardstick and broader industrial analysis)
Historical Performance
While value investing is a subjective method, it involves closely studying a stock to find out if it is undervalued or not. Studying the historical financial results of a company to find out its true potential among the industry and competition and analyzing profitability and PE ratios and dividend yields are some typical methodologies employed.
Moat Identification
A ‘moat’ is the ability of a company to build a unique advantage for itself over its competition. Companies that have distinct moats can perform better translating into bigger and stronger profits.
Industry Analysis
Critical to our research process is the in depth financial and fundamental analysis of a company’s intrinsic value. We use qualitative and quantitative analysis techniques to determine the share’s worth.
Company and Industry Analysis
Company and Industry analysis are closely interrelated and form part of the larger fundamental analysis of a company. Industry analysis involves identification of a particular group – or industry which is best positioned for growth given the current and future market scenario.
Picking the Best Stocks on GARP
Growth at a Reasonable Price (GARP) is an investing approach that combines growth investing and value investing strategies to select individual stocks. The application of GARP involves seeking those companies that display consistent earnings and growth as compared to broad market levels. It excludes any companies that have very high valuations – the idea is to stick to steady, sustainable and consistent growth.