From The Horse’s Mouth: Ayush Aggarwal, CIO, SMC Private Wealth

Mr Ayush Aggarwal is the CIO (Chief Investment Officer) at SMC Private Wealth and a Director at SMC Group. His opinions are carried out by prominent business channels like CNBC Awaaz. His articles have also been published by reputed groups like economictimes.com. Mr Aggarwal is also known for his knack of identifying high potential as well as fundamentally strong companies. HNI clients at SMC have gained significantly from the practical and far-sighted approach of Mr Aggarwal.

Mr Ayush is an avid reader and his love for reading keeps him abreast with the latest happenings in the financial sector. A graduate from the prestigious Delhi University, Mr Ayush Aggarwal is also an MBA from S.P. Jain Institute of Management and Research, Mumbai.

So, without further ado,

Tell us a little bit about yourself

Currently, I am a Director & Chief Investment Officer (CIO) at SMC Private Wealth and manage SEBI - registered PMS schemes in the company. I did my graduation from Delhi University and did my post-graduation in from SP Jain Institute of Management and Research, Mumbai. I was always interested in knowing about the companies with unique ideas and pondered over their practicality and chances of success. My education in stocks was initiated during my graduation. My father, Dr D.K. Aggarwal, (CMD - SMC Investments and Advisors), a prominent stockbroker in the country became my first guide and gave me many valuable lessons such as investing in fundamentally strong stocks that keep me in very good stead even today.

How did you start your investing journey? What got you to the markets?

Prior to joining my family business, I had this thought that people at SMC will expect me to have complete knowledge about the stock markets. To cover this shortcoming my father advised me to start watching business channels and reading business Newspapers. This is how I took my first step into the world of Investing. I gradually gathered confidence and started investing with smaller amounts into the stock markets. This is how it continued for close to one year and taught me about the various nitty-gritty about stock markets without much at stake in monetary terms.

The first stock you bought, first loss and what did you learn from it?

The first stock I bought was Sterlite Technologies Ltd. which still is one of the largest optical fibre manufacturers in the world. My first loss was in Ajmera Realty & Infra India Ltd. The lesson I learnt from that loss was that the sector in which you invest is as important as the company.

What are the basic metrics you look at a business when you are valuing or looking at it to invest?

Although there are multiple metrics we see before investing in any company. Below are some of the very first metrics -

  • Quality of the top management
  • Corporate Governance
  • Growth Trajectory
  • Debt/Equity Ratio
  • The outlook of the sector in which the company operates

One thing you regret doing in your investment journey

I don’t believe in regrets instead I take them as learnings from experience. One such example was the case where we liked a company’s business and prospects despite a constant increase in its debt position. Ultimately, the company ran into losses as it was not able to control its interest cost. So, the learning, in this case, was that we need to give equal importance to the debt position of the company as we give to its business and prospects.

When do you sell a stock? What are the criteria according to your rationale that a stock has reached its life? When do you know it’s time to get out of stock?

There are different reasons that influence my decision to sell a stock. The important ones are listed below:

  • If I do not see any incremental growth in the company or the sector itself.
  • Valuation of the stock becomes very expensive and it seems difficult that the stock price will sustain.
  • Fundamentals of the company have deteriorated, and it seems that it may not improve in the medium to long term.
  • The medium to long term outlook of the company given by the management is below our expectation.

Do you invest in PE? Do you advise retail investors like us to do the same? 

No, I do not invest in private equities. I think it depends more on the risk profile of the investor as selling your stake may become difficult if one is not able to find a buyer. Hence, I would not advise a retail investor who has a conservative risk profile to invest in private equity.

Top 3 books you would recommend for our readers

The Intelligent Investor, Coffee Can Investing, Super Investors – Lessons From the World’s Greatest Investors are some of the books I would recommend to anyone who wishes to make a career as an investor.

Do you see a growth in Small and Midcap space in 2020? What sectors are you betting on? 

Yes, we believe that there should be good price appreciation in fundamentally strong midcap and small-cap stocks in 2020. The fact that both midcap and small-cap as a pack have fallen over 20 to 30% in the last 18 months has made them undervalued. As is evident from the recent FM speeches, the Government is undertaking the necessary corrective measures to bring stability and positivity in the economy.  In such a case, when quality stocks are undervalued and Government has started the process of reviving the economy, we strongly believe that this is an appropriate time to increase your exposure in quality midcap and small-cap stocks.

Talking about sectors, we would like to bet on private banks, consumer durables, capital goods and infrastructure as a pack.

How do you increase your market knowledge?

I am an avid reader and diligently go through reputed financial newspaper like Mint, Economic Times, Business Line etc. I also watch leading business news channels with great interest as well as interviews of the leading fund managers of the country. I also attend economic forums as well as industry-related seminars. This is how I keep myself abreast with the latest happenings in the market.

Who is your role model in investing?

Though I do not believe in role models as I genuinely think that one should have a knack of identifying different stocks based on his own experience, yet I am an ardent admirer and have certainly borrowed many investing lessons from Warren Buffett’s style of investing. Mr Ashok Aggarwal, Chairman – Globe Capital Market ltd has also helped me in sharpening my investing skill. I believe the knack and acumen of investing which I have now developed have been the result of constant guidance and advice given by him.

Disruptions – What do you think of them and how do you evaluate if a business you are looking at as a prospective investment won’t get disrupted easily

Disruptions are part and parcel of the game and therefore you should be on your toes all the time. I take into consideration the impeccable track record of the company as well as how it will sustain and grow in the coming 5 to 10 years. Moreover, we also make sure that the company holds a competitive edge over others in the area it operates including timely technological adaption.

One advice you would like to give to younger people who have just started investing

Though there are multiple points one should keep in mind, I would like to stress on identifying the right companies that you can hold for at least 5 to 10 years without worrying about the volatility in their respective share price in the short term if their fundamentals remain intact.

The above is for educational and informational purposes only. It is not an endorsement or a stock recommendation. The author may be holding the securities mentioned above. Do your independent and thorough research before investing.

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