I met Ayaz Ebrahim exactly a decade ago. Based in Hong Kong, he was visiting India.
At that time, he told me that the main factor he considers when analyzing a stock is management vision followed by management track record.
Have they been able to deliver on what they set out to do? If not, have they been able to articulate the reasons well? Does their strategy make sense?
Once he is convinced on the above, other factors come into play.
(You can read the transcript here.)
Now at JP Morgan, his earlier stints were with Amundi, HSBC Global Asset Management, Deutsche Asset Management and Crédit Agricole Asset Management.
He clearly likes to invest in the Indian banking sector, as can be seen from his latest views.
My best investment ever has been Indian financial services firm HDFC, which I first invested in in the early 90s and is still in our top holdings. I visited the company and thought it was great - very well managed, with a conservative approach and a strong balance sheet. It has delivered annualised returns of 35% in dollar terms since then. I wish I invested in it personally, too.
The one stock I wish I had bought but did not is Titan Industries. It came onto my radar in the early 90s when it was focused on watches but in the late 2000s it transformed into a jewellery and gold company - the share price has gone from strength to strength since.
My worst investment ever was a derivative issued by a well-known Asian investment bank in the 90s. It gave exposure to stocks in India, which was a very closed market at the time so difficult to invest in directly. Unfortunately, the investment bank went under during the financial crisis so the derivative went to zero. I got the money back, but it was nerve-wracking and taught me the importance of being conservative and thinking careful about counterparty risk.
We are currently overweight Korea, Indonesia, China and India. The way we do country allocation is by looking at valuations and the GDP growth in all of these regions is rising, China and India in particular are still growing at roughly 6% a year.
- Morningstar UK, November 2019
We hold a couple of banks where our expected returns are still very attractive, and these companies will compound earnings and returns. Unless the valuations get to extreme levels we will hold them for several years. These are classic examples of stocks that have a strong non-cyclical growth story.
There is increasing use of banks in India and the introduction of technology has increased their reach into rural areas.
With India, we like the banks and the consumer sectors, but there are some stocks that although fundamentally great are on valuations that are just too expensive.
- Investors Chronicle, April 2019
