Girik Capital - Portfolio Management Services

Step 1

Automated Screening for Superior Outcomes

Industry Strength

Industry strength relative to other industries
50% of a stock performance tied to the industry group
Shortlist leading stocks in leading industries

Relative Price Strength

Look for leading price performers
52 week and lifetime highs
Winners show price strength early in a bull cycle

Earnings Acceleration

Stable historical earnings
Accelerating current annual & quarterly earnings
Immense future earnings growth potential

Step 2

Establishing Leadership

Product/ Service Leadership

Ability to Scale

Management Track Record

Efficient Capital Allocation & Superior Return Ratios

Governance Standards & Alignment of Interest

Step 3

Fundamental Research Overview

Business Model

Product / service leadership
Market size & opportunity
Management efficiency – superior execution & delivery
Relevance to all stakeholders

Financial Metrics

Superior return ratios
Efficient use of capital
Healthy free cash flow generation
Funding of growth ideally through internal accruals
Low to no debt

Governance

No significant related party transactions
Minority shareholder friendly (E.g. - Dividends, Buybacks)
Alignment of interests - management compensation & ESOPs
Ideally no large promoter pledges and sales in the past
Professionally managed; genuine board of directors; reputed auditors

Step 4

Valuation Consideration

Value in Growth

Expensive in the short run but cheap in the long run
Accelerating earnings growth combined with leadership ensures premium multiple justification

Margin of Safety

Assessment of longevity of growth and leadership
Estimate downside risk of going wrong due to overestimating growth

Traditional Valuation Metrics

Reliance on traditional valuation metrics can be deceiving
Trading Multiples (P/CF, P/E, EV/EBITDA) relative to historical averages – significant premium requires serious justification
“Low P/E” investing can be a value trap

Step 5

Risk Management Framework

Portfolio Review

Weekly fundamental stock reviews
Ensure balance in portfolios based on industry & stock concentration, market cap weights, and liquidity
Check for technical / distribution patterns

Eliminating Losers

Identify and eliminate investment mistakes actively
Monitor for any sectorial and stock weakness
No averaging down on a loss making position

Taking Profits

Riding winners until see earnings growth deceleration
Selling in euphoric tops
Red flags – crowded trades, consensus bets, excessive media coverage, over-guidance from management

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