Stock selection will be guided, inter-alia, by one or more of the following strategies.

Finding Value in Ignored Ideas:

The portfolio will scout for value in areas ignored by the investing community. Contrarian calls will be taken in companies that are likely to witness a steep change in performance in future. Typically, good contrarian stocks tend to be less susceptible to price declines, as the built in expectations are already low. Some of the scenarios we envisage are:

• Disparity in peer group valuation - in this scenario, we look at sectors that are witnessing strong growth. We follow a bottom-up approach in identifying a company whose potential is underestimated.
• In an out of favour sector - We may invest in a sector that is out of favour, if we believe that the fundamentals are changing for the better.
• Special situations - We would look at investment opportunities arising from special situations such as turnarounds, restructuring, M&A’s, Management changes etc.

• Growth at a reasonable price - this relates to value stocks, which also have potential earnings growth. We prefer these to value stocks based purely on assets, as we believe that earnings growth unlocks value better and faster.
• Growth/value if an anticipated event materializes - this relates to value stocks where triggers for unlocking value and/or growth are based on an anticipated event.
• Pure Value - this category includes stocks that are too cheap to be ignored.

• Identify current “good” companies available at reasonable valuations, and that hold potential to become “great” in the long term.
• To seek misappraised opportunities when “good to great” companies are available cheap, owing to factors that impair prospects only in the short term.