Do what the promoter does

 

1. What is this Smallcase about?

This basket of stocks is formed on a simple thesis - the promoter knows best.

There is evidence that you can outperform the market if you invest in the “best of companies” where promoter is increasing stake. As per a study by a leading PMS, the average returns from 2005-2021 for a portfolio built for all companies with promoter buying is 23.7%.

2. Why does it work?

A promoter has the most real insights about the industry and business, so it works as a forward-looking indicator. Further, if there is buying across multiple companies in a sector, it indicates significant tailwinds.

3. Can one simply buy any company where promoters are buying?

No for three reasons:

  1. Every quarter, there are 300+ names and you cannot really buy all and track them
  2. Your buying price should not be significantly higher than the promoters’
  3. Many end up being just value traps. 

4. How can this basket help?

We have analyzed all companies where there has been promoter buying recently to bring you the best 20 companies based on a detailed study - financials, management quality, growth triggers, and some other softer aspects. We will rebalance this on a monthly basis as required.

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