What is the secret of multi-bagger returns for wealth creation?

While there are plenty of investment opportunities, identifying and investing in the right stocks is crucial for wealth creation. In this regard, focusing on managing risks with well-planned entry and exit strategies while navigating market volatility could help not only in wealth creation but also in constructing a portfolio of multi-bagger returns.

PMS Bazaar conducted its second edition of the Dubai Alternative Investment Summit (DAIS) in Dubai on February 17, 2024. As part of this event, the company invited various industry experts to share their insights on the Indian alternative industry. One such expert, Anil Rego, CEO & CIO of Right Horizons, shared his expertise on identifying the multi-bagger opportunities in the Indian equity market. His topic on the event day was: The multi-bagger formula for wealth creation.

Anil Rego opened his presentation by exploring the concept of identifying and investing in "multi-bagger" stocks. Multi-baggers are those that have the potential to double or more in value. He stressed that success in this area was not only about finding a single exceptional stock but rather about building a systematic process for uncovering such opportunities while effectively managing the associated risks. Rego demonstrated through examples of Right Horizons past successes and he mentioned that incorporating multi-bagger investments can significantly enhance a portfolio's overall value over time. Rego also pointed out that economic trends play a role in stock picking as the tailwinds would help in the performance.

Identifying multi-bagger investment opportunities

Following his initial remarks, Rego explained how to identify a multi-bagger and the process and filters Right Horizons follows. He offered the audience the screening methodology at Right Horizons involving a diverse universe of companies, followed by an in-depth analysis. The recurrent theme of proactive risk management showcased a steadfast commitment to safeguarding investments against potential downturns, thereby enhancing the resilience of the overall portfolio. He emphasised that creating wealth isn't about randomly picking stocks but requires a careful and thorough approach. He encouraged investors to avoid seeking quick gains and instead adopt a methodical strategy that aligns with their long-term financial goals.

A significant aspect of Rego's presentation centred on evaluating both earnings growth and valuations in the pursuit of identifying potential multi-baggers. This nuanced approach, blending fundamental analysis with an understanding of market dynamics, seeks to identify opportunities that sync with the long-term objectives of investors.

Rego’s discussion then transitioned towards the previous investments made by Right Horizons and shared his insights on the same. He highlighted the crucial role of managing risks with well-planned entry and exit strategies. Using the APL Apollo tubes as a case study, he emphasized the importance of ongoing analysis and adaptable decision-making within the dynamic financial environment.

Mitigating risks

While acknowledging the market's potential and expressing optimism for its future, Rego was open to sharing his thoughts on the market encountering volatility. His advice to investors to remain vigilant and manage expectations served as a reminder of the inherent uncertainties within the financial landscape.

To mitigate risk, Rego recommended employing approaches like a Systematic Transfer Plan (STP) approach, where investments can be staggered over time. This could help to navigate market fluctuations by avoiding entry into an investment at an inopportune time. Additionally, he highlighted the importance of considering business risks which involve high valuation, corporate governance and more when making investment decisions. Essentially, the focus was on achieving risk-adjusted returns.

Rego concluded the session with the key investment themes that Right Horizons would explore in the coming years. Finally, he engaged in a Q&A session with the audience.

Watch the entire presentation to understand more about spotting economic trends and how adopting a systematic approach to alternative investments can help in multi-bagger returns.