Lecture on the Contrarian Investment Approach and Insider Activity

Speaker: Mr. Maran, Executive Director of Unified Capital

Introduction

• Unified Capital is a specialized PMS firm with a 20-year history.
• Headquarters: Chennai
• Managing ~5000 crores with over 3000 clients.
• Focuses solely on fund management.

About Mr. Maran

• Started his career in equities in 1991.
• One of four co-founders of Unified Capital in 2001.
• Developed various investment strategies.

Main Topic: Indian Promoters as Contrarian Buyers

• When promoters increase stakes, market sees risk and uncertainty.
• Example: Market crash in March 2020 saw significant promoter buying.
• Misinterpretation of global analysis when applied to India.

Know Your Country (KYC) Series

• Understanding unique characteristics of India's market.
• Initiated due to more familiarity with western markets.
• Focus on understanding India's market and economic data.

Market Insights

• Indian market heavily influenced by promoter activities.
• Promoter vs. Executive Management:
  • In India, often the same (e.g., MD and promoter are the same or appointed by the promoter).
  • In the West, ownership is institutionalized.

India Market Cap Overview

• Current market cap: ~$2 trillion.
• Composition:
  • Top 30 companies: ~50% of market cap
  • Top 100 companies: ~80% of market cap
  • Promoter ownership: 55%
  • FII ownership: 20%
  • Mutual funds and others: 13%
  • Retail investors: 12%

Promoter vs. FII Ownership

• FIIs dominate free-float market cap.
• Promoter stakes are relatively stable across large, mid, and small caps.

Promoter Activity and Market Behavior

• Promoters are contrarian buyers, especially during market downturns (e.g., 2008 and 2020).
• Methods of increasing stake: creeping acquisition, preferential shares, warrants, rights issues, buybacks.
• Promoter actions indicate market opportunities.

Detailed Analysis and Insights

• Promoter actions during market downturns demonstrate confidence and long-term perspective.
• Study of promoter buying patterns can indicate broader market undervaluation.
• Correlation between promoter buying and market rebounds.

Strategies and Investment Plans

• Historical examples of promoter buying leading to strong returns (e.g., 2008 and 2020 crises).
• Promoter activity as a key indicator for investment decisions.
• Unified Capital's strategy focuses on capturing these opportunities.

Q&A Highlights

• Insights on the current market run-up and promoter buying strategies.
• Products available for capturing these investment opportunities.
• Promoter pledge shares and its implications on equity performance.
• Addressing small cap risks and benefits with respect to promoter activity.
• Practical tips on understanding and leveraging promoter activities.

Closing Remarks

• Emphasized continuous learning about market cycles and promoter activities.
• Encourage fundamental and detailed study of market and company specifics.
• Unified Capital's commitment to delivering unique investment insights based on proven strategies.