PMSes have nearly 200 unique stocks in their disclosed portfolios, with single-stock weight as high as 32% allocation in a strategy. In this article, we take a detailed look at the most-owned stocks, unique stocks, sectoral preferences and stock allocation weights in May 2020.
'If you are not willing to own a stock for 10 years, do not even think about owning it for 10 minutes' --- this is one of the most popular quotes in the investing world. Walking the talk, portfolio managers often wait patiently for a stock to reach their optimum value without being distracted from inflows and outflows. At PMS Bazaar, we track 127 PMSes to bring a deep-dive into their top 5 holdings. In this article, we take a detailed look at the most-owned stocks, unique stocks, sectoral preferences and stock allocation weights in May 2020.
Stocks universe
According to data available of 127 PMSes, portfolios have 635 securities that can be counted as top holdings. Do note that these 635 securities are not unique; the same stock can be present in multiple portfolios.
Coming to unique stocks, their number is 196. As many as 59 unique stocks (30.1%) fall in the Large Cap segment. The Mid Cap segment has 60 unique stocks (30.6%) and the Small Cap club has 77 unique stocks (39.3%).
Most-owned stocks
A typical equity buyer's decision is usually heavily influenced by the actions of acquaintances, neighbours or relatives. Thus, if everybody around is investing in a particular stock, the tendency for potential investors is to do the same. However, in the investing world, there are other factors at play. Valuations, business potential and management matter a lot. Plus, PMS strategies have to operate under an investment philosophy/mandate which may limit the number and type of stocks they hold.
According to the PMS Bazaar study, the 10 most-owned stocks are a combination of 7 Large Caps and 3 Mid Caps. In the Large Cap space are HDFC Bank (46 portfolios), ICICI Bank (30), Reliance Industries (29), Divi's Laboratories (18), Bharti Airtel (17), Infosys (14) and Hindustan Unilever (13). The most-owned stocks in the Mid Cap segment are Aarti Industries (14 portfolios), P I Industries (11) and Sanofi India (11).
A month on month comparison will show that there is not much change in the top-4 stocks. May 2020 saw stocks like Hindustan Unilever come back in top-10. Sanofi India appears a new entrant. Do remember that entering and exiting top-10 most-owned stocks does not necessarily mean they are top-10 most-bought stocks too. At a portfolio level, top holdings can move up or down due to change in market capitalization as well.
Stock talk, sector preferences
Let us also take a look at the most-owned stocks in 3 segments viz. Large Cap, Mid Cap and Small Cap.
The Large Cap list as of May 2020 includes HDFC Bank, ICICI Bank, Reliance Industries, Divi's Laboratories, Bharti Airtel, Infosys, Hindustan Unilever, Kotak Mahindra Bank, Avenue Supermarts and HDFC. Notice the preference for financials in the Large Cap list; many of the stocks are in benchmark indices. Financials remains the most influential sector in the indices, though their clout has gone down due to Covid-linked correction. Till the market discovers the leaders of the next long-term rally, financials appear to be the status-quo choice.
The Mid Cap list for the month includes Aarti Industries, P I Industries, Sanofi India, Abbott India, Dr Lal Pathlabs, Whirlpool of India, Alkem Laboratories, Bata India, Coromandel International and Indraprastha Gas. The overwhelming rally in pharma and healthcare stocks clearly reflected the top-10 most-owned Midcap stocks, with this sector bagging 4 of 10 slots.
The Small Cap most-owned stocks list in May 2020 is dominated by specialty chemical/chemical-linked company and pharma stocks. The most popular is Alkyl Amines Chemicals, followed by APL Apollo Tubes, Granules India, Dixon Technologies India, GMM Pfaudler, Deepak Nitrite, Vaibhav Global, Indian Energy Exchange, JB Chemicals & Pharmaceuticals and Astrazeneca Pharma.
Allocation tit-bits
When PMS portfolio managers show conviction in a stock idea, they tend to take higher concentration in them. The PMS Bazaar study showed such tendencies remaining in the May 2020 portfolios.
Single-stock allocation weight is as high as 32.25% for Aarti Industries. The next in this list are Alkyl Amines Chemicals (21.93%), Fortis Healthcare (20.16%), JK Paper (20.00%), Bajaj Finance (19.05%), Sun Pharmaceutical Industries (16.90%), GMM Pfaudler (16.27%), Avenue Supermarts (15.30%), Divi's Laboratories (15.15%), and Abbott India (14.88%). A high level of conviction to a single-stock may be because of investment philosophy or mandate.
Typically, thematic or sectoral PMS strategies are known to keep high single-stock allocation in portfolios. In terms of lowest allocation to single-stock, we found 10 names. The lowest single-stock allocation is Tube Investments of India (1.01%), Deepak Nitrite (1.07%), Reliance Industries (1.13%), Alkyl Amines Chemicals (1.23%), Bharti Airtel (1.27%), Tata Consumer Products (2.15%), SRF (2.55%), Ahluwalia Contracts (3.00%), Sudarshan Chemicals (3.04%) and Coromandel International (3.06%). Mind you that these low allocations could be a reflection of the plan to diversify the portfolio holdings.
Recent Blogs
Why Invest in Start-Ups for Wealth Creation?
PMS Bazaar recently organized a webinar titled “Why Invest in Start-Ups for Wealth Creation?” which featured Mr. Vinit Rai, MD& CIO, Managing Director, JM Financial Equity. This blog covers the important points shared in this insightful webinar.
Why Investors Are Turning to Semi-Liquid Credit Funds?
PMS Bazaar recently organized a webinar titled “Why Investors Are Turning to Semi-Liquid Credit Funds?” which featured Mr. Dipen Ruparelia, Chief Business and Product Officer, Vivriti Asset Management. This blog covers the important points shared in this insightful webinar.
Equity PMSes outshine benchmarks in February despite third straight market correction
Nearly 3/4th beat Nifty 50 TRI, while average equity PMS return stayed positive at 0.9 per cent amid volatility
Why Indian Family Offices Are Shifting from Real Estate to Alternative Investment Funds?
This Article is Authored by Rishi Agarwal Co-Founder & Fund Manager, Aarth Growth Fund
Core and Satellite Approach to Equity Investing
PMS Bazaar recently organized a webinar titled “Core and Satellite Approach to Equity Investing,” which featured Mr. Swapnil S Kulkarni, Co-Founder, PriceBridge. This blog covers the important points shared in this insightful webinar.
The Edge of Second-Order Thinking in Fund Management
PMS Bazaar recently organized a webinar titled “The Edge of Second-Order Thinking in Fund Management,” which featured Ms. Harini Dedhia, Head, Research and Portfolio Manager, Tamohara Investment Managers. This blog covers the important points shared in this insightful webinar.
Capital Before the Spotlight: Why India’s Capex Decade Will Create a Once-in-a-Generation Pre-IPO Opportunity
India’s first three decades after liberalisation were powered largely by consumption and savings. Services expanded, brands flourished, and domestic demand drove growth. Capital formation, however, remained relatively restrained.
India’s Equity Evolution: From Wealth Creation to Generational Legacy
Author - Vijay Bharadia CIO & Managing Partner, Wallfort PMS & Advisory Services LLP. He has over 28 years of experience in Indian equity markets with deep expertise in mid and small-cap investing. As CIO & Managing Partner of Wallfort PMS, he has delivered over 45% CAGR in the last five years, through disciplined stock selection and on-ground research. His investment approach focuses on understanding promoters, business cycles and buying quality businesses without overpaying. Having navigated multiple market cycles, he believes wealth creation is driven by process, patience and the courage to stay invested when others hesitate.