Value Investing & bottom-up stock picking:
A sound investment philosophy that can survive the test of time

Good investing is all about individual bottom up stock picking, focusing on the macro-economics of each individual business and ignoring all the noise around geopolitical tensions, disease outbreaks, rising interest rates, rising inflation, and all the noise in the media.

We are bullish on value investing as the ultimate investment strategy because “the basic principle of buying something for less than what it is worth will never get old”.
Quoting Philip Fisher that the stock market is filled with individuals “who know the price of everything, but the value of nothing”. But instead of focusing on volatile stock prices, which keep bobbing up and down every day, it is wiser to follow the underlying business values.

It takes discipline to make long-term gains in the stock market. More importantly, before making any investment, one must study about the company, its competitors, company filings, and annual reports of the last 10 years. We also suggest reading the financial statements, outlining the management discussion and analysis section where one can grasp changes in management tone and industry outlook and observe recent trends in insider shareholding.  Once the initial groundwork is covered, one can proceed to study parameters such as income statement analysis, cash flow analysis, balance sheet analysis, returns ratios analysis, operating efficiency analysis, management, and quality analysis. 

However, we emphasize there is no single strategy that works all the time and in every kind of market, and hence it is essential to build up one’s investing arsenal to be able to hunt for value from within different areas.

If you can relate to Stellar Wealth’s value investing philosophy, explore the FlexiCap smallcase which follows this approach

About Stellar Wealth’s FlexiCap smallcase

Whether you are new to smallcases or have already invested in some before, the FlexiCap smallcase is an ideal choice for investors looking to generate alpha & superior risk adjusted returns over the long term.

The FlexiCap portfolio comprises a diversified collection of 20-25 stocks from sectors such as Pharma, Chemicals, Bank & NBFC, Auto Ancillary as well as new age industries like Cloud Computing, Music Streaming & Digital Transformation. 

The smallcase constituents are a blend of long-term compounders & shorter-term tactical bets like commodities, cyclicals, and special situations (demergers, mergers, arbitrage, promoter/management change). The investment universe lies predominantly within Top 500 companies by market cap. 

This smallcase is structured to be long-term in nature and it is recommended for subscribers who have an investment horizon of at least 10 years. We will always prioritize longevity of healthy returns over short-term high returns.

About Gautam Baid

Gautam Baid was pulled into the stock market frenzy when Dalal Street was witnessing a euphoric bull market phase between 2003 and 2007. He purchased mutual funds in the energy and steel sectors only to see his investments crash by 70 to 80 percent a year later. Gautam calls that initial loss his “admission fees” into the Indian stock market. But the last decade has been an eventful journey in pursuing his passion.

Gautam Baid, CFA, is the founder of Stellar Wealth Partners Private Limited, a SEBI registered Research Analyst firm. He is also the author of the international best-seller on value investing, The Joys of Compounding and a strong believer in the virtues of compounding and lifelong learning. He has over 15 years of experience investing in the Indian markets.

Previously, he served as portfolio manager at Summit Global Investments, an SEC-registered investment advisor based in Salt Lake City, USA. Gautam is a CFA charterholder and member of CFA Institute.