27/04/2024
Attended an Insightful session of Chief Investment Officer, Parag Parikh Mutual Fund - Mr. Rajeev Thakkar - The Star Fund Manager of Parag Parikh Flexicap Fund (Though, when you meet him you don't get the vibe of a star but of an intelligent man who knows what he is speaking)
The session went on for 2 hours but here are a few questions I tried to get his answers on:
1. How does the size of the fund (INR 60,000 Crs) may impact its performance?
--- According to him, size of the fund doesn't matter but the size of the AMC matters. Because the decision making revolves around AMC philosophy, the same analysts working for different funds and fund managers etc... So, the decisions and SEBI limitations on buying stocks are at AMC level rather than fund level so AMC size is more important.
2. The number of stocks in Flexicap fund has increased from 20-25 to 48 now. Is the AMC also feeling the lack of opportunities in the market due to high liquidity and valuations?
----- He partially agreed with the reason of high liquidity and valuation comfort but also added that there has been listing of new ideas through IPOs and where there was a single listed player in a category there are more players listed now giving us the opportunity to diversify or if there was none there are players to chose from due to new listings.
3. How is he planning to manage returns in large inflows and high valuations?
----- He believes there are always pockets in the market which are under-invested and undervalued, so he tries to place his bets there. Also, currently they are sitting on 15% of cash in Flexicap fund which is historically high for them as well. He also believes that there is a good chance that the excess liquidity from the market would be taken care by more IPOs in the near future.
4. What is his take on the popular statement that "India is a Growth market rather than Value Market"? (I specifically asked this question because Parag Parikh always presents themselves as value oriented AMC)
----- He believes that he doesn't invest in narratives and future stories but rather wants to see the numbers on P/L and balance sheet along with sound management, moat etc. In his experience, the stocks bought on future expectations with no numbers to support them usually turns out bad investments. Also, their is always a mix of growth strategy in his value buying as no stock can give returns without future growth expectations. He doesn't believe in buying at any price as it certainly turns out a below par investment in the long run.
5. I couldn't extract an answer on this particular question due to some diversion of the topic to somewhere else. The question was regarding Government's role in creating returns for investors through fiscal spending - defence, Infra, PSUs etc. and how Parag Parikh AMC position itself in this space with all time high valuations in these sectors.
Overall, it was wonderful interacting with him as I found him humble and true to his style of investing.
Kindly note that this post is for information only and none of it is to be considered an investment advice in any stock or mutual fund.
