The convictions and confidence of joindre’s stock selection was realised when Mr. Jayaram candidly displayed the list of current stock holdings of top-10 in the portfolio, which is about 60% of the entire portfolio. He patiently explained the sector diversification of the top-10. The six different sectors are FMCG, banking, chemical, pharmaceuticals, IT and Oil & Gas. He further revealed the absolute returns of this top-10 since purchase till a day before the webinar. Investors could note that 8 of the top-10 had performed positively between 5 % return and as high as 197% return, while 2 of the laggards with negative -6.39% and negative -17.97% drawdowns. Mr. Jayaram went on to elaborate on his convictions on holding onto these stocks with specific Management related actions and the financial performance of these companies. The common factors highlighted by Mr. Jayaram across all the companies held in the joindre’s value portfolio, is their ability to grow and deliver superior returns. He has further projected an estimate of 15% to 20% CAGR return by these companies in the next 5 years period.

The marvel of the deep-dive analysis stock selection was realised when Mr. Jayaram went on to explain how Hindustan Unilever Ltd., was added to the portfolio through peer comparison of other FMCG stocks Dabur, Marico, Godrej CP and ITC’s FMCG division. Through a slide presentation Mr. Jayaram, elaborated the income statements, margin parameters and valuation metrics of HUL comparing with its peers, adding advantages of the recent acquisition of GSK by HUL.

Mr. Jayaram opined that the pandemic has affected the economy globally and it has changed the base of doing business. Businesses which are able to adapt quickly are going to survive on the basis of their strong balance sheet. Citing the example of the US stock market hitting a lifetime high recently, recovering 40% since recording its lowest on 23rd March, Mr. Jayaram, pointed the crucial role of the portfolio manager in stock selection to sail through such temporary market volatility. Such volatility is mainly caused due to perception rather than the fundamentals. Mr. Jayaram’s client first attitude was vindicated when he declared that the remunerations to the Portfolio Managers are justified only when they can generate consistent Alpha.

Way forward on Global and Indian Scenario

Pointing to the near zero interest rates globally, Mr. Jayaram reasoned the flush of liquidity may over reach the equity markets, but strong companies across various industries will benefit, implying that the success derives from right stock selection. Cautioning on the forthcoming US presidential election, Mr. Jayaram revealed his preparedness for the volatility the political variance will create on the economy and equity markets. (Republican and Democratic candidates)

Mr. Jayaram expressed positive results would emerge from the recent policy reform initiative of Indian Government through ordinance under the essential commodities act. Freedom ceded to the farmers to sell their produce anywhere is a welcome move to enable agricultural sector to attract more capital formation, which will boost the rural economy. 

On conclusion of the presentation by the speaker, Mr. Daniel GM, Founder director of PMS Bazaar, opened the session for questions from the delegates of the webinar. Answering the question on future of auto sector, Mr. Jayaram opined that the two wheelers are likely to be the first sub-sector to catch up and the pandemic related prevailing social distancing with reduced levels of public transport will boost the entry level four wheeler sales.

Answering a question on US market surge in spite of the heightened bad effects of the pandemic, Mr. Jayaram attributed the reason for market recovery to the huge stimulus package announced by the US (and affordable due to the sheer size of the GDP), which infused liquidity in the citizens pockets. He further ascertained that the rapid recovery of the US markets in itself an evidence of the investors’ confidence on the stock market.

While answering another question, Mr. Jayaram expressed his confidence that the Pharma API manufacturing in India will eventually replicate the imports in the long-term, supported by the subsidy reforms of Government of India to reduce Chinese dependence on raw materials.

Mr. Jayaram’s convictions on fundamentals could be understood, when he answered the question on recent bullish sector telecom and its stock Reliance & Bharti Airtel. He pointed to the negative balance sheet of Bharti. He categorised the Amazon investing news as prospective. The value investment patience was evident, when he expressed that he will wait for Reliance Jio to separate and get registered before considering for investment. Expressing overall impact on the sector, Mr. Jayaram welcomed the global giants’ interest on Indian online platform as positive for the economy.