ETMarkets AIF Talk: This fund manager with over Rs 250 cr in AUM suggests these 4 filters to pick stocks

economictimes.indiatimes.com:

“Highly leveraged companies, frequent equity dilution, etc are some of the traits which are avoided while picking companies,” says Siddharth Oberoi, Chief Investment Officer at Prudent Equity. In an interview with ETMarkets, Oberoi who manages AUM of over Rs 250 cr said: “The Indian economy is doing very well. Companies focused on domestic demand are witnessing double-digit growth” Edited excerpts:The Prudent Equity ACE Fund has been a marked outperformer since its launch in 2022. Take us through your investment philosophy. The fund started in December 2022 and has been able to generate returns of 26% in the first 7 months of operation.

Our core focus remains on the following: • Capital Allocation — Management demonstrating prudent allocation of capital over the years. • Margin of Safety — Buying at a significant discount to intrinsic value.

• Corporate Governance — Run by ethical management that treats minorities at par. What are the investment criteria used by Prudent to filter stocks for investments? Companies growing at high rates - a) Buying at a significant discount to intrinsic value b) Management demonstrating prudent capital allocation over the years c) Run by ethical management that treats the minority at par d) Highly leveraged companies, frequent equity dilution, etc are some of the traits which are avoidedWhat makes you so positive in banks, construction, and industrial equipment sectors? During the covid period banks made large NPA provisions. Thereafter the economy saw a brisk recovery.

Banks benefited in both ways; an economic recovery led by the reversal of past NPA provisioning. Another positive was the increase of NIMs of banks due to the increase in interest rates at a time when the cost of funds