From 'Cash Flow' in the company to being a 'Muqabala' partner, Harini Dedhia shares her investment tips

 

• An avid reader of history and non-fiction books, Harini Dedhia is a portfolio manager at Tamohara Investment Managers in Mumbai.

An avid lover of history and non-fiction books, Harini Dedhia's journey into the stock market began during her final year at New York University. During his internship at a hedge fund in the US, Dedhia realized that Gujarati blood ran in his veins. Though emotionally attached to the family and the love for Alphonso mangoes, Dedhia decided to give up the lucrative salary and take a leap of faith and come back to India. He believes that 20s is the time to take risks in career. Dedhia, who completes 15-20 books on an average in a year, is a portfolio manager at Tamohara Investment Managers in Mumbai. “When I was working in Manhattan, on every floor of every building, there was a fund manager. It felt like a very saturated market. But when I came back here, I felt that there was a lot of research and research going on here. There is a lot to be done in the matter." Process driven organisation," she said. Dedhia shared his portfolio details, investment strategy and financial journey with Livemint. Edited excerpts:

Please select your first Stock and Mutual Fund?

style="font-size: medium;">The first stock I picked was Nucleus Software Exports Ltd. At that time, it was a ₹500 crore market cap company. I made money from it, but it was a net worth bet. I didn't spend enough time understanding the business or the quality of the product.

My brother looks after my mutual fund investments. To avail the benefits of Section 80C, I started my first mutual fund investment in Mirae Asset Tax Saver Fund.

How do you find stocks as your price picks?

The two areas I primarily focus on are 'cash flow' and 'growth of those cash flows'. I am always on the lookout for companies that are growing faster than the nominal GDP of India. If India's nominal GDP is growing at 12%, a company's sales are growing at 13-15%, operating profit is growing at 15-17% and cash flow is improving as a result of balance sheet growing at 17-19%, so that's what I want my portfolio to be.

The money is not in buying and selling stocks but in holding. How long do you prefer to hold portfolio stocks?

The average holding period for the portfolio I execute is currently over three years. I haven't sold the first couple of investments I made for my clients.

Please share your favorite areas where you find a comfortable price selection?

I don't really focus on any particular area, instead, I like to look at things across the board. However, if I have to name a specific sector, I would say - pharmaceuticals and infrastructure. Currently, I see a lot of opportunities in both these sectors, but both are 'stock specific'. There are a lot of landmines and a lot of opportunities in both of these areas.

What is your asset mix?

I have 95% equity, and six months' worth of expenses in debt, which would be 1% of my net worth. I have some gold which my mother gifted me on my marriage.

Do you invest in international stocks?

When I was in the US, I used to invest in international stocks. I have investments in international stocks through mutual funds, but no direct equity investments. My brother looks after my mutual fund investments. I only invest in Indian stocks as I see a lot of opportunities here.

We become successful after making mistakes. Any mistake of yours that you would like to share with our readers?

One mistake that I made was by investing in Kesar Terminals & Infrastructure Limited. It was a company that had very good cash flow. Once I met with their management at the AGM and realized that there was a disconnect between what I thought was happening and the execution. I found some red flags, but I still believed in that company. I was a bit complacent and hesitated to sell it. That was my biggest mistake -- complacency.

Please share the investment strategy which is working well for you?

Two things have really worked for me - One is the simplification of my investment philosophy. I spend more time understanding the business, quality of management and shopping for the right price. The second thing is to have a fighting partner. Before Tamohra, I used to run my own small PMS fund. At that point, I was living in an echo chamber, making mistakes. When I added it to Tamohara, I had my fighting partner, Sheetal Malpani, Chief Investment Officer, who could stand up to me and say I agree with you on this and I don't on that. We always joke in my office that every Warren Buffett needs a Charlie Munger. Without each other, they would not have the success that they have now. Every investor must have a sparring partner.

The strategy that hasn't worked for me is expecting too much from people. Sometimes as an investor I feel that we all emotionally