When I started buying direct equity (largely driven by one brokerage house) we used to use words like value investing. For me dividend yield was a huge attraction. So Pressure Cooker Alliances (Hawkins!),  Tata Power (dull boring power company with 7% dividend yield), VIP Industries (etc. etc.) were good shares to buy. Later on I added shares like Hdfc Ltd., Apollo Hospital (below par and a dividend yield in excess of 10%), Cholamandalam Investments (1986 I think, not sure).

Slowly I found a pattern…”Does the promoter leave enough on the table for you to eat”. No promoter is Dettol dipped clean. Most of them, if not all of them siphon out money through various means. I like the Mncs because they take more openly (even if they are fleecing). They are also very clear that they do not need your money. So Colgate, Gillette, PnG, HuL, can go private in 2 weeks, if they so desire. So Murugappa group, Tata group (selectively), MNCs, Hdfc, LnT, ..became the core of my portfolio. Lucky me, you could say.

Then came the mutual funds and I was looking at the industry top down. Templeton and Hdfc choose themselves because of the people who worked there. They became the core of my life, for the mutual fund part. Till of course Naren joined Icici Prudential Amc. Sorry when Nilesh of FT joined Icici Pru and inspired Naren kinda person to join.

Again fund manager integrity mattered. So PJ, Sukumar and Naren fitted the bill well and the third fund came on board.

What is fund integrity and fund manager integrity?

Well the fund manager should be honest, and also seem to be honest.

The fund manager should have a track record of consistency in behavior. So Franklin India Bluechip should not have a mid cap stock and Icici Pru Discovery should not have a share at a pe ratio of 45. That was fairly and firmly in place (aka true to label)

The fund manager should not buy shares based on political pressure (Imagine a psu set up where the fund manager could be pressurized to buy paper which the government wants to sell. Like how LIC was pressurized to pick up psu IPOs and FPOs.

The fund manager should buy stocks, clearly for the long term and not for one or two quarters. Sure there can be times when you make a mistake and quickly correct such transactions…

 

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