As of today, I increased position size in Aditya Birla AMC from 2% to 4%. This reduces cash to 7%. The current market fall has increased the opportunity pool again and I am happy to allocate more capital to my existing positions and also increase the number of portfolio companies. I will keep this thread updated as and when I make changes.
There is definitely lots of chatter about this, there are few trends that are quite clear.
- Industry level growth will be 15%+ over an extended period of time
- Bank backed AMCs will take a dominant pie (as is clearly evident in last couple of years)
- Niche boutique firms with robust investing processes will always have a unique place, however they will be badly impacted if they are too rigid with their process (e.g. Quantum AMC)
The one question for which I don’t have an answer to is the significance of different distribution networks in bringing AUM. If large platforms (Zerodha, Groww, etc.) start pushing their own products, how big an impact will the incumbants feel. The current distribution mix is very small from these platforms and also highly skewed towards young males in the 25-35 age bracket. Their penetration is very low in 40+ individuals, especially those who can put large sums of money to work. But this is something to be tracked
Generally, entry of newer players increase the overall size of the pie by bringing newer participants. An example from a different industry is Patanjali which was supposed to kill all FMCGs, but ended up not opening a new ayurveda division that benefitted incumbants. In case of AMCs, incremental market share of individual players is available on a monthly basis, thus easily verifiable. This means we can make course correction if a new trend emerges and continues for a reasonable amount of time. Lets see how future unfolds.
Core compounder (58%)
| Companies | Weightage |
|---|---|
| I T C Ltd. | 8.00% |
| Housing Development Finance Corporation Ltd. | 4.00% |
| NESCO Ltd. | 4.00% |
| Manappuram Finance Ltd. | 4.00% |
| Ajanta Pharmaceuticals Ltd. | 4.00% |
| Aegis Logistics Ltd. | 4.00% |
| Alembic Pharmaceuticals Ltd. | 4.00% |
| Amara Raja Batteries Ltd. | 4.00% |
| Avanti Feeds Ltd. | 4.00% |
| Eris Lifesciences Ltd. | 4.00% |
| HDFC Asset Management Company Ltd | 4.00% |
| Aditya Birla Sun Life AMC Ltd | 4.00% |
| HDFC Bank Ltd. | 2.00% |
| PI Industries Ltd. | 2.00% |
| Control Print Limited | 2.00% |
Cyclical (16%)
| Companies | Weightage |
|---|---|
| Kolte-Patil Developers Ltd. | 4.00% |
| Sharda Cropchem Ltd. | 4.00% |
| Ashiana Housing Ltd. | 2.00% |
| Ashok Leyland Ltd. | 2.00% |
| SWARAJ ENGINES LTD. | 2.00% |
| Kaveri Seed Company Ltd. | 2.00% |
Slow grower (6%)
| Companies | Weightage |
|---|---|
| Cochin Shipyard Ltd. | 4.00% |
| Power Grid Corporation of India Ltd. | 2.00% |
Turnaround (6%)
| Companies | Weightage |
|---|---|
| CARE Ratings Ltd. | 4.00% |
| Lupin Ltd. | 2.00% |
Deep value (7%)
| Companies | Weightage |
|---|---|
| SJVN Ltd. | 1.00% |
| ATUL AUTO LTD. | 1.00% |
| Jagran Prakashan Ltd. | 1.00% |
| D.B.Corp Ltd. | 1.00% |
| Time Technoplast Ltd. | 1.00% |
| RACL Geartech Ltd | 1.00% |
| Shemaroo Entertainment Ltd. | 1.00% |