Reasons behind Porinju Veliyath's large bets on tiny and micro-cap stocks

Reasons behind Porinju Veliyath's large bets on tiny and micro-cap stocks

Following the weekend surprise assault on Israel by the Palestinian terrorist organization Hamas, the markets are in a tizzy as a result of the conflict between Israel and Gaza. Even as the death toll from the Middle-East crisis surpassed 2,000, oil prices soared and stocks fell in early trading on Monday. Such international geopolitical developments often have a detrimental effect on investors' financial portfolios. And for that reason, financial professionals always advocate asset diversification as a risk management strategy. However, it is not unusual for fund managers to put all of their own money in equities. Equity Intelligence's creator and portfolio manager, Porinju Veliyath, accomplishes just that. But there is one thing that makes his equities portfolio unique. The most volatile market categories, small- and micro-cap stocks, make up the majority of its holdings.

Veliyath attributes his optimism in the small-caps to the abundance of value prospects in the market. For small businesses, he thinks expansion is required and not an option. Additionally, he asserts that the multi-baggers may be found in these little businesses. Hindware Homes, Tata Elxsi, CDSL, PDS, Raymond, Gati, and West Coast have proven to be multi-baggers among his small-cap choices.

Some of his stock holdings have surged in value by up to 30 times in the last three years, in keeping with the current small- and mid-cap boom. The same is happening with his company Equity Intelligence's PMS (portfolio management services) and AIF (alternative investment fund) programs. "We have stuck to our strengths, delivering 61% CAGR (compound annual expansion rate) in Pmp and 69% CAGR in AIF since March 2020 (when the global pandemic of covid was at its peak)," he noted in a chat with Mint for the article.