Just like an Entrepreneur, Investing is an isolated journey at the beginning, but you need to make sure you are not abandoned from rest of the world and caught in an echo chamber (far away from reality and caught in perception world)
Wealth creation gradually happens when the majority accepts the idea by seeing the execution pan out. Most of my Portfolio is in microcaps n SME stocks. I have tried to share some of the common features observed by me while investing in such microcaps.
I am sharing my exp over the last 10 years. Hoping it will be useful to someone who has just started his inv career. The most important thing that we as an investors chase is Growth. We keep on mentioning the word value investing.But value without any growth is just a value trap
What differentiates the growth factor among companies are âClarityâ, âQualityâ and âQuantumâ of earnings trajectory. When all 3 are in sync together, rerating is longer and sustainable. In Microcaps investing, assessing fundamentals is not sufficient with quant analysis.
When the Balance Sheet is empty and the Cash flows are negative, one has to play outside the coaching manual. The thread that connects the investors with a winning idea is the âpromoterâ â his hunger for growth and possession of some winning traits/unit economics.
For Me Market Cap is not PAT x PE- Itâs Vision of the Promoter X Execution/Scalability of the Business.
The challenges in microcaps in their early stages are plenty like stretched working capital, client concentration, immediate conversion of profits into cash flows, liquidity
The challenges in microcaps in their early stages are plenty like stretched working capital, client concentration, immediate conversion of profits into cash flows, liquidity
Almost all stocks where I invested were illiquid. Most of my friends asked me "stock kaisa bikega" and what i found out was by the time(2-3yrs) the stock deliver numbers,the liquidity comes automatically. What used to take me over months to accumulate, used to get sold in a day
Most of these companies were run by first generation entrepreneurs. Promoters used to be surprised that someone has approached them to understand about their business and they used to say âYou are the first investor to meet usâ.
For me Investing isnât about mugging ratios, doing various mental models, scanning through screeners, DCF. Its more of a tangible activity where I prefer to personally meet the management and understand his long term vision and what he is doing currently to achieve the same.
Investing is my passion not profession. I travel very frequently around 18-20 days a month, it keeps me healthy and the rush of blood makes sure I am healthy and active. There is no easy cake walk method in investing, one has to slog out and find his own way to success.
What works for me may not work for someone else. In investing the thesis must be simple, clear and process must be fungible. Market always does what it has to, One canât be rigid, we need to adapt to various situations.
Majorly, the prices used to run up first and then the numbers used to get delivered later. There used to be period of consolidation where fundas backfill the valuations & prices used to catch up the moving averages, before the real up move starts again. (The Grinding Phase).
Identifying a multibagger is only a fraction of job done, the real deal is holding it for longer duration. In Microcaps drawdown of 40-50% are very common. Stomach to digest volatility is a critical factor and majority of initial investors could never encash the full potential
Micro caps are real time long term investment, one needs to be proactive here. When you are buying microcaps, you must be really naĂŻve to believe there wont be major drawdowns in your investing journey. Though everyone signs up for the volatility but very few make it in reality
What I have experienced is Companies where public expectation were the least have delivered the most. Your ability to eliminate noises, dodge technical, digest volatility, will differentiate you from others.
Many investors ask meeting management in person, visiting plants is only privilege for few. Thatâs incorrect, young investors have started taking investing seriously and they are doing ground work without hassles. Today cos have became more transparent ready to meet individuals
When I started my investing journey in 2013 with just a few lakhs, I could have taken the easier route. But myself choose the road less travelled. When IPL started many people were not bullish but over a period of time a lot of stars emerged and it became a super blockbuster.
Subsequently we found gem players like Surya, Siraj, Bumrah etc who made it big in the international arena. Similarly, SME is the platform where many companies come to perform but only few make it big. Junks will always be there but that doesnât mean the platform is worthless.
In SME lots of scepticism will be there. But multibagger always born in scepticism. So one shouldnât discard the platform. At the end Hardwork, Patience, Conviction, Grit and Determination are necessary traits for a successful investor.
Humbleness to be grounded and always approach the market with folded hands. The more you are grounded, the more you fly high.Absorb the good qualities from others and eliminate the bad ones. Learn from others mistakes too along with your own.
Every successful person travels a painful journey. Suffering is an integral and essential part of any real pursuit of success. The fastest way to achieve success is to first help others succeed.
When you accept that there is no success greater than inner peace and contentment, you instantly qualify yourself for more success. Thanks for reading, hope it adds some value to your investing journey.
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