L&T Mutual Fund - Contra Fund

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L&T Contra Fund :

L&T Contra Fund April 2011 An Open Ended Equity Scheme Only for Distributor's consumption and not for further circulation 1

Contrarian Investing:

Contrarian Investing Contrarian Investing In layman terms, “ Contrarian Investing” refers to strategy of investing in stocks or sectors where consensus opinion appears to be wrong or has been carried to excesses. Expert’s view on Contrarian Investing “Go the other way. Ignore the conventional wisdom. If everybody is doing it one way, there’s a good chance you can find your niche by going in exactly the opposite direction” – Sam Walton 2

Investment Objective:

Investment Objective The objective of the scheme is to generate capital appreciation by investing in equity and equity related instruments by using a 'contrarian strategy'. Contrarian investing refers to buying into fundamentally sound scripts which have underperformed / not performed to their full potential in their recent past. 3

Investment Strategy:

Investment Strategy The Investment strategy of the Fund is directed to investing in stocks which have underperformed/not performed to their full potential in the recent past. The major reasons for underperformance could be Non discovery of a sector / stocks Low short term growth potential as per market expectations Lack of understanding of sector/stock’s business dynamics by the market Negative news in the short term in the sector/stock 4

Investment Process :

4 Identify universe of stocks which have underperformed / not performed relative to the markets by a margin of more than 10% during the last 3 months , 6 months, 12 months and 3 years. Isolate stocks from this universe which are fundamentally sound. Identify reasons for the under-performance / non performance of the stocks 5 PORTFOLIO CONSTRUCTION PROCESS FLOW Apply our normal stock selection filters– enduring business model, management quality, change in business fundamentals and valuations, by using various analytical tools and management interactions. 1 2 3 5 Investment Process Form a Portfolio 5 Steps

Why Contra Strategy Works ?:

Why Contra Strategy Works ? Market Cycle and Business Cycle do not move completely in Sync Especially, when making a transition from one stage to another. Emphasis on Short Term vs. Long Term profitability/returns Too much emphasis on short term may compromise long term potential Over short run, Stock price = f(Fundamentals + Sentiments +Liquidity). However, over longer run Stock Price = f(Fundamentals). Expectations are built mostly in linear fashion while the business doesn’t Market generally overreacts on sectors/stocks in both directions 6

Contrarian Opportunities:

Contrarian Opportunities Contrarian Opportunities exist at Stock levels at Sector levels at Market capitalization levels 7

Contrarian strategies work at sector level Not all sectors perform similarly at a particular time :

Contrarian strategies work at sector level Not all sectors perform similarly at a particular time Source: Stock Market Top Identified by Business Cycle - Rotate Sectors for Growth , Donald Dony http://www.marketoracle.co.uk. Market and business cycles work at some lags. Hence, buying sectors that are underperforming currently but expected to outperform over period is a contrarian style of investing. For illustration purposes only . Sectors mentioned are not recommendations from the AMC or its associates. 8

Contrarian strategies at market capitalization levels:

Contrarian strategies at market capitalization levels Just as different sectors outperform/underperform over market cycles, so do the market capitalisation segments perform differently over market cycles. Hence, higher exposure to particular segment could contribute to better/ worse performance. Source: Bloomberg, Note: Quarterly Indices performance of largecap , and midcap indices has been plotted. Green circle imply outperformance of mid segment v/s. large cap segment and red circle imply vis -a -versa For illustration purposes only . Sectors mentioned are not recommendations from the AMC or its associates. 9

Few examples of sectoral and stock level stance taken in past 1 year:

Few examples of sectoral and stock level stance taken in past 1 year 10

Slide 11:

Sector Calls 11

Sector calls - Auto:

Sector calls - Auto BSE Auto Note : Graph shows monthly returns of the stock vis-à-vis weight of the sector in L&T Contra Fund We were positive on the sector factoring higher than consensus growth due to increased wage levels, govt. spending and comparatively lower base. As consensus upgraded their estimates based on strong numbers, we gradually reduced our exposure. We might again increase weight selectively where value seems to have emerged post sharp correction in stock prices. The above is for illustration purposes only. Sectors / Scrips mentioned are not recommendations from the AMC or its associates. These are some of the stock or sector rotation strategies that has paid in recent past. 12 Sector Weight age in % Monthly Absolute Returns of Sector in %

Sector call - Pharmaceuticals:

Sector call - Pharmaceuticals BSE Pharma We were positive on the sector for larger part of CY2010. However, we have reduced our weights in the sector substantially as we believe the sector has had dream run for last couple of years and not much value is left in the sector. The large cap pharma universe is trading in expensive territory (~25x), while midcaps have started underperforming on the operational front. Note : Graph shows monthly returns of the stock vis-à-vis weight of the sector in L&T Contra Fund The above is for illustration purposes only. Sectors / Scrips mentioned are not recommendations from the AMC or its associates. These are some of the stock or sector rotation strategies that has paid in recent past. Monthly Absolute Returns of Sector in % 13 Sector Weight age in %

Sector call – Capital Goods:

Sector call – Capital Goods BSE Capital Goods We became positive on the sector based on our expectations of recovery in the sector after two year of lull post recession. However, due to stagnation in government policy decisions/actions, the sector has not performed in line with our expectations. We continue to maintain our overweight stance on the sector as we believe current rate of growth will warrant fresh capex to cater future demand. Note : Graph shows monthly returns of the stock vis-à-vis weight of the sector in L&T Contra Fund The above is for illustration purposes only. Sectors / Scrips mentioned are not recommendations from the AMC or its associates. These are some of the stock or sector rotation strategies that has paid in recent past. 14 Sector Weight age in % Monthly Absolute Returns of Sector in %

Sector call - Banks:

Sector call - Banks CNX Bank We had reduced our position slightly ahead of the outperformance of the sector as we believed valuations were not justifiable given the headwinds of higher interest rates. We are now overweight the sector with bias towards Private Banks as they have proven record of generating profits in a rising interest rate scenario. Note : Graph shows monthly returns of the stock vis-à-vis weight of the sector in L&T Contra Fund The above is for illustration purposes only. Sectors / Scrips mentioned are not recommendations from the AMC or its associates. These are some of the stock or sector rotation strategies that has paid in recent past. 15 Sector Weight age in % Monthly Absolute Returns of Sector in %

Stock Calls:

Stock Calls 16

Stock calls – TATA CONSULTANCY SERVICES:

Stock calls – TATA CONSULTANCY SERVICES TCS – We were positive on the stock mainly on account of strong earnings visibility, which was not being factored in the prices at that point in time. TCS V/s. CNX500 monthly returns Note : Graph shows monthly returns of the stock vis-à-vis weight of the stock in L&T Contra Fund The above is for illustration purposes only. Sectors / Scrips mentioned are not recommendations from the AMC or its associates. These are some of the stock or sector rotation strategies that has paid in recent past. 17 Stock Weight age in % Monthly Absolute Returns of Stock in %

Stock call – Bharti Airtel :

Stock call – Bharti Airtel Bharti – Stock had underperformed due to concern on domestic tariff war and Zain acquisition. We believed that domestic fundamentals were nearing the bottom which was not reflected in the valuation. We have reduced our aggressive overweight stance but continue to remain positive on the stock based on stabilising domestic operations. Bharti V/s. CNX500 monthly returns Note : Graph shows monthly returns of the stock vis-à-vis weight of the stock in L&T Contra Fund The above is for illustration purposes only. Sectors / Scrips mentioned are not recommendations from the AMC or its associates. These are some of the stock or sector rotation strategies that has paid in recent past. 18 Stock Weight age in % Monthly Absolute Returns of Stock in %

Stock calls - Hindalco Industries Ltd:

Stock calls - Hindalco Industries Ltd Hindalco – The stock had underperformed grossly on concerns of global recovery. We were positive both on macro front and turnaround of Novelis Hindalco V/s. CNX500 monthly returns Note : Graph shows monthly returns of the stock vis-à-vis weight of the stock in L&T Contra Fund The above is for illustration purposes only. Sectors / Scrips mentioned are not recommendations from the AMC or its associates. These are some of the stock or sector rotation strategies that has paid in recent past. 19 Stock Weight age in % Monthly Absolute Returns of Stock in %

Market Cap Calls:

Market Cap Calls 20

Market cap call:

Market cap call Mid & Small cap Composition Note : Graph shows monthly returns of the stock vis-à-vis weight of the segment in L&T Contra Fund Our exposure to Mid & small cap segment has been relatively higher over period. We believed that when economy turns this segment has relatively higher delta to surprise in earnings, which leads to shrinking of valuation gap vis-à-vis large caps. In recent times the earnings performance of mid and small cap segment has been negatively impacted by the financial and operating leverage, leading to downgrade in earnings expectations and P/E contraction. However, we expect that current phenomena could be temporary and earnings performance of mid and small cap segment would catch up, which may lead to narrowing the valuation gap. This is for illustration purposes only. Sectors mentioned are not recommendations from the AMC or its associates. 21 Mid & Small Cap Exposure in % Monthly Absolute Returns of Market Caps in %

Current Portfolio Positioning:

22 Current Portfolio Positioning

Portfolio Break up :

Portfolio Break up Top 10 Holdings in % Note: Portfolio data is as on March 31, 2011. Sectoral Break up in % The above is for illustration purposes only. Sectors / Scrips mentioned are not recommendations from the AMC or its associates. 23

Broad Changes in portfolio mix:

Broad Changes in portfolio mix Major changes at Sectoral level (During Jan – Mar 2011 quarter) Increased weights in Financials (by 13%), Capital Goods (3%) and Auto & Auto Ancillaries (5%). Decreased weights in Pharma (by 8%), Telecom (by 3%) and Construction (3%). Major Changes at Stock level (in last 6-9 months : 9 months as on March 2011) Consolidated the portfolio with ~40 stock holdings from earlier ~50. Increased weights of top 10 holdings from 28% to 39%. Focus is on taking higher weights in stocks where we have high conviction. The above is for illustration purposes only. Sectors / Scrips mentioned are not recommendations from the AMC or its associates. 24

Current Portfolio Stance (as on March 31,2011):

Current Portfolio Stance (as on March 31,2011) Sectoral stance Major Overweight Stance in Banking & Financial Services Capital goods Cement Major Underweight stance Software Pharmaceuticals Market Capitalization Overweight to Midcap and small cap segment With exposure at ~38% . CNX 500 Weight: Large cap: ~80% (Mkt Cap > Rs 10,000 crs) Mid & Small cap: ~20% (Mkt Cap < Rs.10,000 crs) Please note that this is current positioning of the Scheme, which may change without giving any notice at the discretion of the AMC. It should not be construed as offer for purchase of schemes of L&T Mutual Fund. The above is for illustration purposes only. Sectors / Scrips mentioned are not recommendations from the AMC or its associates. 25

Slide 26:

Legacy Of L&T Mutual Fund L&T Finance took over DBS Chola Mutual Fund in January 2010 The Fund got rechristened as L&T Mutual Fund on February 16, 2010 after completing all statutory processes The entire management team was retained The team includes a 12 member investment team and total staff strength of over 294 members (Feb 28,2011) The AMC is head quartered in Mumbai since 2000 The Fund House has a suite of Debt and Equity products for different investor requirements. Some funds have a track record built over last 14 years. (L&T Triple Ace Fund) Houses the first ever launched AAA rated debt fund – LTMF Triple Ace Fund and Multi Cap Equity Fund in the industry 26

Slide 27:

Over 112 Man Years of Investment Management experience Has won many Awards and Ratings over the years for performance of schemes Led by Sanjay Sinha, CEO – one of the respected Fund Managers in the country Contd.. Past Performance is no guarantee of future results. For Risk factors , scheme related information please refer page 35. For information purposes only & should not be construed as offer for purchase of schemes of L&T mutual fund. 27

Slide 28:

Investment Philosophy “Provide long term gains to investors through strong research based stock selection and active portfolio management” 28

Slide 29:

Create watch list of Stocks based on Liquidity, Ownership pattern and Market capitalization Identify fundamentally sound companies based on Management quality, Competitive position and Valuation parameters viz. RoE , RoCE , PE, PEG, EV/EBITDA. Based on the fundamental analysis and identification of valuation gaps and reasons thereof. Sector weight allocation and stock weight allocation across sectors. Inter sector and Intra sector rotation based on opportunity and relative valuation. Evaluating portfolio performance to identify performance gaps and initiating actions accordingly. Quantitative Analysis Fundamental Analysis Select Stocks Portfolio Construction Calibrate Attribution Analysis Investment Process 29

Research Flow :

Research Flow Evaluate all secondary research inputs Company management/plant visits Obtain relevant primary inputs from other business associates (bankers, vendors, customers, intermediaries etc.) Ascertain sustainability of business model Apply fundamental research tools for financial projections/valuation model Rating recommendation/ Ranking 30

Decision Making Process :

Decision Making Process Analysts propose action on a stock/sector Investment team evaluates the proposal based on risk return score for individual stock/sector for its inclusion/exclusion. Fund manager decides on stock weightage (overweight/underweight/neutral) in the portfolio. Investment committee meets on fortnightly basis to review the sector/stock performance vis a vis the markets and decides on future course of action 31

Branches:

Branches Ahmedabad: 9898029991 , Agra: 9839075275 , Allahabad: 9918500388/0532-3010574 , Amritsar : 9855721024, Bengaluru : 080-42497000/32952142 , Baroda : 8128997153/0265-2491673 , Bhopal : 0755-2552452-53/ 9893654246 , Bhubaneshwar : 9937062565, Chandigarh : 0172 – 3068051 / 9878406940, Chennai : 044-66881190/ 98400 96828/ 9003072863, Cochin : 0484-6533130/ 9895168160, Coimbatore : 0422 4504047- 48 / 9994997599, Cuttack : 9937009935, Durgapur : 9932241935, Guwahati : 9401775040, Goa : 0832 2422720/ 9923285799, Gorakhpur : 8896041988, Gwalior : 9669966100, Hyderabad : 040 44545578/44545577/ 9849523638, Hubli : 0836-4264140/ 9886105569 Indore : 0731 4286032 / 9826012555, Jaipur : 0141- 4043108/ 4043101/ 9950852103, Jalandhar : 9872838208, Jamshedpur : 9334289963, Jamnagar: 8905996999 , Jammu: 9419845915, Jodhpur : 9829309649 Kanpur : 9695051155, Kolhapur : 0231 6614834-5/ 8805020060, Kolkata: 033-40182224/40182222/ 9831500225, Lucknow : 0522 4003245 / 3052460/ 09838119887, Ludhiana : 0161 5029019 / 9855095135, Madurai : 9865966013/0452-4514005, Mangalore: 0824-2443609/ 9663027893, Mumbai (Head Office) : 022- 61366600/ 61366601, Mumbai (Fort) : 022-61155555, Mumbai (Deonar) : 022-61130908/ 61130910 Mysore : 9886639557/0821-2331833, Nagpur : 0712 6621511 / 9372695617, Nashik : 0253 6611791/ 6619211/ 9960025000, New Delhi : 011 49533301-02, Patna : 9708038447 Pune : 020-32912911/ 25510468, Rajkot : 0281-2480131/9825219955, Raipur : 0771 4224107 / 9926808555, Ranchi : 08986724054, Rourkela : 9437648485, Siliguri : 0353 2545474/ 9800202292, Surat : 9924712128, Trichy: 9944055025, Trivandrum: 9605601122, Varanasi : 9839165055, Vijaywada : 9676785656, Vishakhapatnam: 0891- 6620401/ 9676970777 32

Contact Us @:

Contact Us @ SMS LNTMF to 567678 Toll Free No 1800 209 6565 Website www.LNTMF.com 33

Disclaimers & Risk Factors:

Disclaimers & Risk Factors This document have been prepared by L&T Investment Management Limited (LTIML) for information purposes only and should not be construed as an offer or solicitation of an offer for purchase of any securities/ instruments or any of the Funds of L&T Mutual Fund. Market views expressed herein are for general information only and do not have regards to specific investment objectives, financial situation and the particular needs of any specific person who may have receive this information. These views alone are not sufficient and should not be used for the development or implementation of an investment strategy. It should not be construed as investment advice to any party. All opinions and estimates included here constitute our view as of this date and are subject to change without notice. Investments in mutual funds and securities markets inherently involve risks including possible loss of capital and recipient should consult their legal, tax and financial advisors before investing. The recipient of this material should rely on their investigations and take their own professional advice. Recipient of this document should understand that statements made herein regarding future prospects may not be realized. He/ She should also understand that any reference to the securities/ instruments/ sectors in this document is only for illustration purpose. The views expressed are of LTIML, neither this document nor the units of L&T Mutual Fund have been registered in any jurisdiction. The distribution of this document in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe, any such restrictions. 34

Statutory Details & Risk Factors :

Statutory Details & Risk Factors Statutory Details: L&T Mutual Fund has been established as a trust under the Indian Trust Act, 1882 by L&T Finance Limited, Sponsor/ Settlor (liability restricted to the seed corpus of Rs. 1 lakh) with L&T Mutual Fund Trustee Limited as the Trustee Company and L&T Investment Management Limited as the Investment Manager. Risk Factors: All investments in mutual funds and securities are subject to market risks and the NAV of the Scheme of the Fund may go up or down depending upon the factors and forces affecting the securities market. Investment in mutual fund units involves investment risks such as trading volumes, settlement risk, liquidity risk, default risk including the possible loss of principal. Past performance of the Sponsor/AMC/Mutual Fund does not guarantee future performance of the Scheme. The Sponsor is not responsible or liable for any loss resulting from the operation of the Scheme beyond the initial contribution of Rs. 1 lakh made by it towards setting up the Fund. L&T Contra Fund is the name of the Scheme and does not in any manner indicate either the quality of the Scheme or its future prospects and returns. There can be no assurance that the objectives of the Scheme/Mutual Fund will be achieved. Schemes’ specific risk factors: Investment in the Scheme shall be subject to various risks including but not limited to risk associated with: Investment in Equity and Equity related Instruments & Fixed Income Securities such as Performance Risk, Credit Risk, Reinvestment Risk, Interest Rate Risk, Investment in Derivatives, Securitised Debt, etc. Please read the Scheme Information Document and Statement of Additional Information carefully before investing. Load Structure : Entry Load – Nil. Exit Load - 1% if redeemed ≤ 1 year; Nil - if redeemed > 1 year. Terms of Issue: Units of the Scheme are being offered at NAV based prices, subject to the prevailing loads. The AMC calculates and publishes NAVs and offers for sale, redemption and switch outs, units of the Scheme on all Business Days, at the Applicable NAV of the Scheme. Scheme Information Document, Statement of Additional Information, Key Information Memorandum and Application Forms are available at Mutual Fund Branches / Mutual Fund website at www.lntmf.com or at Investor Service Centres / Distributors. L&T Finance Holdings Limited (indirect Holding Company of L&T Investment Management Limited) is proposing, subject to market conditions and other considerations, to make a public issue of securities and has filed a Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI). The DRHP is available on the website of SEBI at www.sebi.gov.in and the respective websites of the Book Running Lead Managers at www.jmfinancial.in , http://www.online.citibank.co.in/rhtm/citigroupglobalscreen1.htm , http://www.hsbc.co.in/1/2/corporate/equities-global-investment-banking , http://www.barclayswealth.com/india-offerdocuments.htm , http://www.credit-suisse.com/in/ipo/ and www.equirus.com . Investors should note that investment in equity shares involves a high degree of risk and for details relating to the same, see ‘Risk Factors’ in the aforementioned DRHP. 35

Slide 36:

Thank You 36

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