Investing Philosphy

I have this simple investing philosophy to pick stocks at any point in time,

  1. Sales and Profits have grown at an excess of 15% over the last three, five and ten year time horizons.

  2. The stocks have paid good dividends in the past i.e. (Dividend Payouts >=15%). This ensures that the management cares about the minority shareholders. Regular dividends is something that is imperative for my picks.

  3. Portfolio concentration (Owner Mindset, Pick one or two stocks at max). This ensures a lot of homework from our side and at the same time we are sufficiently rewarded if proved right.

  4. I generally tend to look at micro-caps (Mcap < Rs 1000Cr). The primary reason being that the business itself isn’t hugely diversified and makes it easy to understand. Also if proved right, we will be sufficiently rewarded.

  5. As a disclosure: I have currently picked two stocks that play the consumption theme. (Chaman Lal Setia : Consumer defensive and Prima Plastics Consumer Cyclical)

  6. Valuations are usually not a concern, the reason being that a lot of growth is ahead and usually micro-caps do not trade at huge premiums.

What are your opinions on a highly concentrated portfolio and also developing an owner’s mindset over the businesses invested in?

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