Investment philosophy
Every investment decision at Prudent
Investment Managers
is driven by the following factors:
Capital preservation over returns
As a priority we focus on preserving capital. We are fairly open to leaving opportunities where we are not convinced even if this means missing a substantial upside. We focus on creating a risk / return matrix for each opportunity in which we are investing and look obtaining for a favourable ratio.
Look for intrinsic value than follow the herd
We are not afraid to swim against the tide as long as we see value in the opportunities. Many a times we have seen us holding asset class / sectors / stocks that have been shunned by the market and available at dirt cheap valuations on near term concerns on earnings
Focus on absolute returns than relative returns
We believe that every opportunity needs to be looked from the lense of absolute returns and there could be times when there are very miniscule set of opportunities in an asset class or vice versa. We are unafraid to take aggressive calls in that environment to exit / enter the asset class in a big way in that environment. Taking cash calls is also part of the core strategy
Manage with a long term view
We are willing to take a long term view ( 1 yrs – 3 yrs) and are looking to invest in opportunities beaten down by the market on short term concerns
Combination of micro and macro research
Our investment process starts with a macro call on the economy ( local and global), valuation of different asset classes, our views on asset classes and sectors that are likely to do well over the next few quarters / couple of years and then it boils down to individual stock selection which will benefit from these trends. At a micro level our investment philosophy is guided by the value investing principle of buying a security at a discount to its intrinsic value. When we invest in a stock, we buy the business and not the stock. We remain agnostic to the daily fluctuating stock price as long as we continue to believe in the business. We view market volatility as a friend that allows us to buy securities at a discount or sell at a premium to intrinsic value.