What is my criteria?

What am I building? It’s secondary. Why? Because it’s just a means to an end. What I’m really trying to do here is solve my investing decisions. Decisions of buy, exit, add, reduce, replace. And how do you do that? You form a framework and stick to it. What does that framework include? Well, firstly you understand yourself as an investor and then accordingly frame the criteria for what you want to hold. A quarterly refresh of all companies in portfolio and watchlists based on that criteria will tell you the decisions needed to make for that quarter. So in essence the question becomes - what is my criteria.

I want to hold quality names with no red flags. I want to hold the highest growth names or do I want to play the highest mispriced bets. Or both.

This is interesting. It may be why I am all over the place in identifying my criteria over the past year. Because in essence, I like 2 criteria instead of 1. And I’ve been thinking about the parts I like about each as one and it often feels like something is missing. How can I like Narayana Hrudayalaya and TD Power with the same context? Clearly, the industry context, valuations, and growth style are different. Maybe I am comparing apples to peaches.

I want to challenge myself to actually write 2 or 3 approaches or criteria. I think that can be the solution to my long standing problems. It can help me with the biggest insider knowledge an investor can possess - knowing oneself well.

Criteria 1

1-2 years

Strong themes, not hot themes. They share outputs usually but are not the same. Strong themes are where structurally there might be a demand - supply mismatch or structural tailwinds created by regulations.

• TD Power
• AI-DC plays - MTAR, Sterlite
• cables and wires for a bit.
• Electrification themes.
• Kirloskar Oil Engines

Theme becomes a very important

Criteria 2

3-5 years | equidivision - SIP

Sit on them. They’re quality. Sit on them for years. Quality comes up big here. The moats, the proven players, the R&D focused, the ones deserving your patience.

• I want to own Narayana Hrudayalaya stock for a long time because I like that they provide relatively lower cost surgeries.
• I want to own NAM India because of what they have done with index funds. I love the strategies here.
• Neuland labs and Sai because of their reputation in the market and other trusted investors. Another name coming to mind is Aarti Pharma and Nuvama.
• Navin & Privi might also come here because of their unique capabilities.
• MCX and Adani Ports - structurally placed to win - monopoly
• Sansera and Wockhardt - they are on 2-3 year journeys

Criteria 3

Mispriced bets

Samhi, Time Techno, JM Finance, the IRR focused plays. Patience needed here. Not high allocation as well maybe? But the exit is also based on market recognition.

What I don’t like

Inspired by the Great Charlie Munger, it is very important to also know what you don’t like. Optionality. Bad forensic record. Commodities.