ALPHA-BETS

Alpha-Bets’ investing methodology is to blend fundamental investing parameters with long term measures of momentum and trend in a systematic manner and avoid common Behavioral Biases. Its objective is to generate long-term capital growth from an actively managed portfolio of equities.

Alpha-Bets is only suitable for investors who are willing to commit their investible surplus to the stock market for a period of five years or more.

Clients portfolio shall comprise of Indian equities, and related instruments and debt securities.

Robust risk management to preserve capital during adverse market conditions.

Our model portfolio only includes those stocks which confirm to our strict stock selection filters. Robust and disciplined processes guide our actions.

Fundamental Attributes

  • Earnings drive prices in the long term
    • Assess Quality, stability and trend of annual and quarterly earnings
  • Respect companies that respect capital
    • Return On Equity and Capital Employed
  • What does management say, what does it do and how does it do?
  • Have there been frequent equity dilutions
  • Sector
    • Secular or cyclical sector
  • Is the company in top 5 of its sector

Trend/Momentum Attributes

  • Market Direction
    • Market cycle studies since 1880 have shown that 3 out of 4 stocks move in the same direction as the overall market, either up or down. (Source IBD)
    • Invest when the market trend direction is up
  • Supply and Demand
    • Institutional buying and selling. Is the stock over owned or under owned ?
    • Institutional buying and selling is primary cause trends in stocks.

market-trends

ALPHA-BETS - Investment Process

  • Invest in a mix of large and mid caps
  • Stick to secular growth sectors
  • Use quantitative fundamental (Profit and Loss, Balance Sheet & Cash Flow) attributes to identify companies with demonstrated robust historical performance
  • Identify potential catalysts which may cause a rerating
  • Use quantitative parameters to measure momentum and trend
  • Assign scores to fundamental and trend/momentum attributes
  • Rank stocks based on the scores to generate a list of stocks to be included in a model portfoli0

ALPHA-BETS - Portfolio Construction

  • Size positions appropriately based on risk: reward characteristics of the stock and the overall market conditions
    • Invest not more than 10% in a single stock.
    • Hold a maximum of 15-20 stocks
  • Evaluate the portfolio on monthly/quarterly basis
    • Winners stay, Losers go
    • Every stock has to justify its place in the portfolio during every review subject to transaction costs
  • In adverse market conditions be defensive and conserve capital by investing cash in debt instruments