Motilal Oswal Asset Management Company Ltd. (MOAMC) is a public limited company incorporated under the Companies Act, 1956 on November 14, 2008, having its Registered Office at 10th Floor, Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai - 400025.
Motilal Oswal Asset Management Company Ltd. has been appointed as the Investment Manager to Motilal Oswal Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated May 21, 2009, executed between Motilal Oswal Trustee Company Ltd. and Motilal Oswal Asset Management Company Ltd.
Motilal Oswal 5 Year G-Sec Fund of Fund (G) - 10.0217Motilal Oswal Asset Allocation Passive Fund of Fund – Aggressive (G) - 11.6363Motilal Oswal Asset Allocation Passive Fund of Fund – Aggressive-Dir (G) - 11.6763Motilal Oswal Asset Allocation Passive Fund of Fund – Conservative (G) - 11.1261Motilal Oswal Asset Allocation Passive Fund of Fund – Conservative-Dir(G) - 11.1688Motilal Oswal Dynamic Fund (Div-A) - 14.2934Motilal Oswal Dynamic Fund (Div-Q) - 12.4016Motilal Oswal Dynamic Fund (G) - 15.772Motilal Oswal Dynamic Fund-Dir (Div-A) - 14.5354Motilal Oswal Dynamic Fund-Dir (Div-Q) - 12.6335Motilal Oswal Dynamic Fund-Dir (G) - 16.7248Motilal Oswal Equity Hybrid Fund - Direct (G) - 16.5083Motilal Oswal Equity Hybrid Fund - Regular (G) - 15.7018Motilal Oswal Flexi Cap Fund(D) - 27.2133Motilal Oswal Flexi Cap Fund(G) - 36.2026Motilal Oswal Flexi Cap Fund-Dir(D) - 27.3228Motilal Oswal Flexi Cap Fund-Dir(G) - 38.8617Motilal Oswal Focused 25 Fund - Direct (D) - 22.6445Motilal Oswal Focused 25 Fund - Direct (G) - 38.6816Motilal Oswal Focused 25 Fund (D) - 20.2746Motilal Oswal Focused 25 Fund (G) - 34.5445Motilal Oswal Large and Midcap Fund - Dir (D) - 17.4052Motilal Oswal Large and Midcap Fund - Dir (G) - 17.4199Motilal Oswal Large and Midcap Fund (D) - 16.8117Motilal Oswal Large and Midcap Fund (G) - 16.8117Motilal Oswal Liquid Fund - Direct (Div-D) RI - 10.0077Motilal Oswal Liquid Fund - Direct (Div-F) RI - 10.0078Motilal Oswal Liquid Fund - Direct (Div-M) - 10.0562Motilal Oswal Liquid Fund - Direct (Div-Q) - 10.0294Motilal Oswal Liquid Fund - Direct (Div-W) RI - 10.0093Motilal Oswal Liquid Fund - Direct (G) - 11.2297Motilal Oswal Liquid Fund - Regular (Div-D) RI - 10.0055Motilal Oswal Liquid Fund - Regular (Div-F) RI - 10.0074Motilal Oswal Liquid Fund - Regular (Div-M) - 10.0547Motilal Oswal Liquid Fund - Regular (Div-Q) - 10.0283Motilal Oswal Liquid Fund - Regular (Div-W) RI - 10.0162Motilal Oswal Liquid Fund - Regular (G) - 11.1816Motilal Oswal Long Term Equity Fund (D) - 21.5252Motilal Oswal Long Term Equity Fund (G) - 27.401Motilal Oswal Long Term Equity Fund -Dir (D) - 25.7245Motilal Oswal Long Term Equity Fund -Dir (G) - 30.0141Motilal Oswal Midcap 30 Fund (D) - 26.6253Motilal Oswal Midcap 30 Fund (G) - 43.584Motilal Oswal Midcap 30 Fund-Dir (D) - 27.6105Motilal Oswal Midcap 30 Fund-Dir (G) - 47.9385Motilal Oswal Multi Asset Fund - Direct (G) - 11.0504Motilal Oswal Multi Asset Fund (G) - 10.8467Motilal Oswal Nasdaq 100 FOF - Direct (G) - 24.5725Motilal Oswal Nasdaq 100 FOF - Regular (G) - 24.2877Motilal Oswal Nifty 50 Index Fund - Direct (G) - 15.1429Motilal Oswal Nifty 50 Index Fund (G) - 15.0261Motilal Oswal Nifty 500 Fund - Direct (G) - 17.4922Motilal Oswal Nifty 500 Fund (G) - 17.2501Motilal Oswal Nifty Bank Index Fund - Direct (G) - 14.8144Motilal Oswal Nifty Bank Index Fund (G) - 14.6103Motilal Oswal Nifty Midcap 150 Index Fund (G) - 20.2801Motilal Oswal Nifty Midcap 150 Index Fund-Dir (G) - 20.5801Motilal Oswal Nifty Next 50 Index Fund - Dir (G) - 14.9702Motilal Oswal Nifty Next 50 Index Fund (G) - 14.7873Motilal Oswal Nifty Smallcap 250 Index Fund (G) - 20.9342Motilal Oswal Nifty Smallcap 250 Index Fund-Dir(G) - 21.236Motilal Oswal S&P 500 Index Fund - Direct (G) - 15.5415Motilal Oswal S&P 500 Index Fund (G) - 15.3866Motilal Oswal Ultra Short Term Fund - Dir (Div-D) - 10.0265Motilal Oswal Ultra Short Term Fund - Dir (Div-F) - 10.0505Motilal Oswal Ultra Short Term Fund - Dir (Div-M) - 10.0336Motilal Oswal Ultra Short Term Fund - Dir (Div-Q) - 10.1781Motilal Oswal Ultra Short Term Fund - Dir (Div-W) - 10.0377Motilal Oswal Ultra Short Term Fund - Dir (G) - 14.2066Motilal Oswal Ultra Short Term Fund (Div-D) - 9.9638Motilal Oswal Ultra Short Term Fund (Div-F) - 9.9746Motilal Oswal Ultra Short Term Fund (Div-M) - 9.9644Motilal Oswal Ultra Short Term Fund (Div-Q) - 10.1091Motilal Oswal Ultra Short Term Fund (Div-W) - 9.9674Motilal Oswal Ultra Short Term Fund (G) - 13.7231

Real investing requires a lot of grit and stubbornness

Blog Blog Details
  • May 09, 2018
  • Manish Sonthalia|
  • PMS - CIO
Bull markets always spawn investors who love investing in the short term. However, as any seasoned investor will tell you, the only way to invest in stocks is being long term. For Manish Sonthalia, CIO and Director, Motilal Oswal India Fund, and Head- Equities, PMS, long-term essentially mean a period of three years or more. Since a long-term is made up of a number of short terms, Sonthalia pays a lot of attention to quarterly, half-yearly and annual results. In an interview with Kumar Shankar Roy, the fund manager talks about the three stocks he would invest his life savings in, why he doesn t t like investing in a company that works for its bankers and how predicting ten years of growth is more of an art than science.

Can you tell us what brought you to the world of investing and what made you stay on?
In 1992, after clearing class 12, I began reading The Economic Times on a daily basis - I read stories of stocks soaring, the stories of money being made by certain individuals. This got me interested in stocks and stock markets. I tried to find the answers to a very basic question- what makes stocks move? This was the beginning of my investing journey.

You manage the India Zen Fund, which is a long only bottom-up approach equity fund. Why the bottom up approach?
The India Zen Fund is now the Motilal Oswal India Fund (MOIF), which is the replica of the Next Trillion Dollar Opportunity PMS Strategy (NTDOP) on the offshore platform.

Over the last 25 years, I have understood quite well that only the long term approach to equity investing suits my temperament. I have tried out a whole lot of other things in the stock market, but I found that only this method works best.

Essentially, if you want to make money from stocks, you have to predict how much money a company will make over a long period of time. Essentially the stock price is nothing but the present value of future cash flows. Hence, the bottom-up approach to equity investing. Can you take us through your stock-selection process?
Ideally, I look out for structural businesses as opposed to cyclical and global cyclical. These companies should have exhibited a ROCE (return on capital employed) of more than 15 percent for some time period (15 percent, because the cost of capital in India on a thumb rule basis is about 14 to 15 percent). After that comes figuring out the growth that the company will exhibit in the future, keeping some margin of safety when it comes to paying the price for that growth and living through the entire company lifecycle or product lifecycle, as the case may be. I try to exit before the company is about to go through a difficult period.

What is distinctive about your investment philosophy?
I try to estimate the terminal value of businesses as precisely as possible. This takes a lot of effort, time, money and energy. It s not very easy. Predicting the longevity of growth correctly is the crux of wealth creation in stocks.

If you had to live on a desert island for the next 10 years and could only invest your life savings in three stocks, what would they be and why?
Page Industries, Hindustan Unilever and HDFC Bank. Their products will never become obsolete. They are the masters of their businesses and they are good at manoeuvering their business models to changing business environments to produce decent growth at all times.

As a fund manager, what are you doing that your competitors aren t doing yet?
We have a well-documented philosophy and process and we stick to this philosophy irrespective of market conditions. This is the clear communication that we have for our clients. I don t think competition has so much discipline.

As a mid-cap stock expert, how do you measure the potential of an opportunity?
If one has to be successful in buying mid-cap stocks, essentially a few things have to be right.

One, the business in question should be a good business, which is to say that Rs 1 invested in that business should throw out more than Rs 1 of cash. Two, the size of the opportunity should be big. Three, the profit pool in the big opportunity should get shared among a very few players. Four, the company in focus shouldn t work for its bankers but for its shareholders, i.e., it must have minimum or zero leverage. Five, the company should double its profits every three to four years.

Take us through some of your biggest investment successes. How, why and when did they happen?
Page Industries, Voltas, Max Financial, Bosch, Eicher, Kotak Bank, City Union Bank, Emami are some of the successes that I have seen.

I think I was able to identify the competitive advantages in these companies quite early and just played the growth cycle in them.

Fund managers sometimes get it wrong. Can you share a few instances of where your judgement did not play out as well as you thought it would?
I have gone wrong many times when I got the management quality and cyclicality in a business wrong.

Have there been stock picks which made you wait for a very long time to deliver returns?
Yes, the stocks that I buy don t start to move the very next day. They take their own time. I buy only quality stocks and they don t ever come cheap.

One has to wait for the next round of growth in the company for the stock to deliver returns and that does take some time.

Competitive advantage, return on capital, growth, management and valuation are usually variables that investors use to screen stocks. How do you figure out the relative intensity of each of these factors? On which ones will you make a trade-off?
We practice QGLP. There can be no compromise on the quality - both business and the management. This comes first. Price comes last - we aren t too fixated about valuations. Everything else comes between these two things.

How do you form a definitive opinion about management quality? Since this is a qualitative exercise, how do you avoid assessment risks?
Assessing management quality is a tricky situation but it should be done diligently. We use both quantitative and qualitative techniques to figure this out. And, of course, our experience and vintage of over 25 years in the Indian stock markets do come in handy in precisely understanding which managements are good and capable of delivering and which are not.

Stiff formulas don t work in investing, but without a fixed process, results can suffer from a lack of stability. How do you strike a balance between science and art when it comes to investing?
Predicting two years of profits is a science. The whole world gets it right. Predicting ten years of growth is an art. The crux to creating wealth from stocks is precisely estimating how much money a company will make over a long period of time - and for this to be done correctly one has to understand the intricacies of how money is being made in that business. So, I focus on the competitive advantage and how long it will last. Markets are more often than not erroneous about the longevity of growth in companies.

How do you eliminate the possibility of a poor stock entering your portfolio?
Our well laid down philosophy and process prevent us from buying the wrong stocks in our portfolios.

When companies make announcements related to expansion, M&A and financial results, how do you view each of these and what do you look for in them?
I am focused only on the long term and for me, long term is a period of three years or more. Since a long-term is made up of a number of short terms, quarterly, half-yearly or annual results - these tell us whether the company is on course to achieving the numbers that I want it to achieve. So, financial results are very important. Expansion and M&A are all about capital allocation. They give us an insight into how the management thinks and this is also very important.

If I were to ask you about the biggest lessons in course of your mid-cap investing career, what would they be?
Real investing is really a very boring thing. It requires a lot of grit and stubbornness to stay your course. It s a very lonely world out here and you have to defend your independence of thought on a daily basis. That s not easy.

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