Mayank Mehraa of Craving Alpha has been buying shares of Balkrishna Industries since 2009 whenever possible. The company is renowned for being one of the most efficient tyre manufacturers globally. When it was established in 1954, the company recognized an opportunity in the niche off-road industry only 30 years ago. Currently, the company holds an 8% global market share and has expanded into the production of carbon black, a key component of tyre manufacturing, even supplying their competitors with this chemical. Balkrishna Industries has established itself as a contributor not only to shareholders but also to employees, markets, and even competitors, creating a positive market position in society.
This is only one of the many stock stories Mayank has to share. He has been an investor in the capital markets for 11 years and a professional derivatives trader for 7. Realising how knowledge is key to growth in the financial markets he cleared the FRM and CFA exams and started a blog to share his learnings from the markets and his research.
He later registered himself as an investment adviser under the SEBI regulations with the objective of spreading professional and institutional level services to retail clients. He is passionate about learning and spends most of his time studying for new certifications, upskilling, and reading books.
How does Mayank want to deliver his services? He thinks investing must consider society as the top priority, otherwise economic laws will eventually cause abnormal growth to cease. This is significant to him because he strives to leave things better than he found them. As a manager, his focus is on creating value for society and upholding ethical values, despite fluctuations in performance tied to broader markets.
Buffett and Gates once discussed the importance of time in life in an interview. According to him, financial freedom is having the ability to use your time as you please. Even if you possess unlimited wealth but lack the time to enjoy it, you are not truly free. Financial freedom is achieved when you possess the resources and time to pursue your passions or do things that bring you happiness.
Financial freedom can be quantified by having 20 times your annual expenses invested in the market.
This would allow for a 5% payout annually to cover your expenses. For those who are not well-versed in investing, investing in the NIFTY ETF can be a simple way to consistently maintain the value of your money.
The simplest way to achieve financial freedom is by starting with something you love. Transforming your hobbies into profitable ventures can be a relaxing rather than stressful way to earn money. Alternatively, investing through an SIP can be the fastest way to achieve financial freedom.
By investing just 10% of your monthly income, you can accumulate 28 times your income in 10 years, securing your financial freedom.
I was more interested in owning brands rather than just being fascinated by their products, unlike my peers. When I purchased Eicher Motors, it was because all my friends wanted to own a Bullet motorcycle.
It is essential to invest in businesses with secular tailwinds rather than just investing in fads.
- To begin investing, one can start by identifying companies whose products they spend the most on in their monthly budget. For instance, Nestle, with a 90% market share in baby chemicals, or pharmaceutical companies such as Abbott with a solid market share in thyroid drugs.
- The second step would be to identify key brands that are more of a household habit, like Bluedart.
Successful investing is when one purchases such brands and businesses at a reasonable valuation.
Identifying Investment Opportunities
Identifying multibaggers is a skill that takes time to develop in Mayank’s experience. He has learned that it’s better to invest in companies with consistent 25% growth rather than those with 40% or 50% growth, as the latter will attract more competition and eventually lose their competitive advantage.
To find a good investment opportunity, look for companies operating in competitive industries but with no direct competition.
He purchased shares in Uno Minda in 2016 because it was the largest manufacturer of horns in India and had a unique advantage of having no direct competition. Since then, they were able to consolidate a fragmented market and establish themselves as the market leader in not only horns, but also switches, alloy wheels, and seatings. Their established relationships with customers made it easier for them to expand their product offerings and increase order values.
Craving Alpha & smallcase
Thanks to smallcase, managing multiple clients has become much simpler for Mayank. His main focus is now on research and reading, rather than tracking portfolios.
Transparency and a track record are major challenges for investment managers, but smallcase has bridged this gap by allowing clients to track their portfolios. The technology integration with brokers makes executing trades easy and ensures that portfolios are aligned with our recommendations. Risk management is typically done through allocation or weights, and smallcase ensures that clients are allocating the correct percentage of their investments.
He believes that smallcase has revolutionized retail investing as much as mutual funds did. The disruption has led to innovation in the industry and has allowed managers like him, who have unique investment strategies, to bring products to the market. smallcase’s transparency has also provided credible return reporting.
As India’s capital markets continue to grow, I am confident that more people will turn to smallcase as their go-to investment product.
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