ETMarkets PMS Talk: This Rs 400 cr fund manager decodes methodology of 10x return in 10 years

In an interview with ETMarkets in association with PMSBazaar, Mehta who manages over Rs 400 cr in AUM said: “Our allocation mantra is also robust to allocate more in a big size company and to allocate less in the sweet spot company between the size of 1k to 5k Cr — company where the margin of wealth creation is much higher” Edited excerpts:

The 212 Degree Wealth Mantra and Growth Mantra are fairly recent PMS schemes is the multicap space. Tell us more about the products and their performance.
Turtle PMS is one of the most curated Strategies Quant PMS in India, we follow a unique model of buying a turnaround business, where the ‘value’ is higher than its ‘price’.

We have crafted a strategy to pick stocks. The system has proven over time that it will pick best performing stocks and sectors in the portfolio, with our formula of PPP i.e. Price, Profits and People.

We buy stocks which are doing ATH (all time high) after a longer time of consolidation. We also take into the account turnaround happening in the business including its ATH Profits

We also schedule meetings with the management and after that we buy business that can create long-term wealth for our investors. We are one of the very few PMS schemes who only invests in human friendly stocks.

Your mission is to give investors an amazing investing experience, by growing your wealth 10x in 10 years by investing in a turnaround business. Tell us how you pick stocks for your portfolio.
We majorly drive to buy companies that are deep dive in valuation yet doing a turnaround story in business. We got this understanding after meeting the management and doing a strategic data crunching.

One of the most unique points of our growth in the next 10 years will be our Exit Strategy. To exit out from any business, which is not performing or which are picked out at the pinnacle, having the core performer in your portfolio helps you to grow the portfolio on a sustainable range.

We have our back record of performing better results than what our mission is. Our allocation mantra is also robust to allocate more in a big-size company and to allocate less in the sweet spot company between the size of 1k to 5k Cr — the company where the margin of wealth creation is much higher.

Take us through your 5Ps of Turtle Wealth?
Here is a brief introduction to our 5Ps –

Portfolio Management Team:
We have one of the best teams for research and 18*7*365 working to create a wealth of investors.

Philosophy and Process:
Our Process as we have talked about is curated with the following extreme level of discipline and back testing, the majorly focus on buying turn around the business which can create wealth in x and if loss in %.

Performance:
We are fairly new in the PMS to talk about the performance but we intend to give 21% CAGR Returns to our investors with 10 years of vision.

Price:
We have one of the most unique fee modules in the industry above 1 Cr. of Investments our fee is 1% Management Fees, 10% of Profit Sharing (At the End of the Contract) and 1% fees will be deducted from the Profit Sharing, you show us long term we also are showing you long term.

Product:
We have curated nearly 3 PMS,
1. Wealth Mantra: where we invest in Turn around Leaders.
2. Growth Mantra: Where we invest in Upcoming Turn around Leaders
3. Bespoke PMS: where we curate portfolios as per the need and objectives of investors.

Also, we have one of the most unique services called Portfolio Review Services, where we give a detailed check-up report of your current portfolio.

How do you manage risk in your portfolio? Who should ideally invest in the fund – is it the high-risk investors or moderate risk takers can also invest in? What should be the ideal Time Horizon?
We have one of the best exit strategies, we decide 1st exit before we enter in a stock, the exits are decided in 3 variations:
1. Price Exit
2. Profit Exits
3. Non-Performance Exits.

This helps us to be non-emotional about the company we are holding, also our portfolio allocation is purely a quant base where we take only 1.2% of Portfolio Risk in stock, for example, if a stock meets its exit point, the maximum loss that can happen in portfolio by that 1 stock is 1.2%.

Since both your products are from the Multicap space – how should one play the small & midcap theme in 2024?
We believe small and midcap have exceptional value in themselves, at 15 to 17 times it’s much more a value so investing in small to mid-cap will yield a great return in the next 4-5 years.

The selection here is key and that changes the game, the company that is between 1 to 5k Cr. is on a very sweet spot, and companies that are in the segment of 10 to 15k cr. are also in a very sweet spot, are our targets backed by our PPP Process.

What is your take on the new age companies? Some would promise big growth potential but might not be making profits.
We like the business model, but as per our process we cannot pick that in our portfolio we will wait for this company to fit in our process and then we would look ahead to buy it, but on a macro scale, the worst is near to over in this company.

Why Exiting in a Loss still makes more sense than averaging in a portfolio approach?
Exits are very important and we humans tend to forget the stocks which has done a huge loss vs the stock which has created great wealth — the ratio is 90:10.

So, if from 100, 90 stocks are wealth distributors and 10 are wealth creators, we need a process to pick up stocks. We also need a strong process to have an exit policy despite how much I love that stock.

For example, we invested in NAUKRI for almost 8 years, but when our exit point came we exited the stock. Today after 2 years, Naukri is at the same level as it was before.

So you not only save money, but you also save time, and in markets, time and money have almost the same value.

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