Insights from Kedia Securities Founder: A Deep Dive into Investment Strategies

In the ever-evolving landscape of Indian finance, few names resonate as strongly as that of the founder of Kedia Securities. As the largest shareholder in several listed Indian companies, his investment strategies offer valuable insights for both seasoned investors and newcomers alike. In a recent interaction with Mint for the Guru Portfolio series, he shared his thoughts on asset allocation, market trends, and the sectors he believes hold promise for the future.

Asset Allocation: A Balanced Approach

When it comes to asset allocation, the Kedia Securities founder adopts a diversified strategy. His portfolio is split as follows:

Equities: 73%
Gold and Silver: 6% (Gold through Sovereign Gold Bonds and Silver via ETFs)
Real Estate: 10%
Cash: 11%

Within his equity investments, he has shifted 20% into more liquid stocks. This decision is not solely based on market capitalization but rather on liquidity and attractive valuations. Despite this shift, 80% of his equity portfolio remains in mid- and small-cap stocks, which he favors for their potential to withstand market fluctuations.

Portfolio Performance: Navigating the Ups and Downs

Reflecting on his portfolio’s performance, he notes a 30% decline over the past year. However, the long-term outlook remains positive, with a 3-4X increase over the last five years. This highlights the importance of patience and a long-term perspective in investing.

Mid- and Small-Cap Stocks: A Mixed Bag

When asked about the current state of mid- and small-cap stocks, he acknowledges a mixed trend. While some stocks exhibit froth, others remain undervalued. This dichotomy presents opportunities for discerning investors who can identify value amidst the noise.

International Investments: A Cautious Approach

His foray into international stocks has been modest, with small investments in two U.S. companies and a Chinese ETF listed on Indian exchanges. Despite initial gains, he emphasizes a long-term holding period, indicating a belief in the eventual stabilization of U.S.-China relations.

Real Estate: A Source of Passive Income

Real estate plays a significant role in his investment strategy. He recently acquired two warehouses, reinforcing his commitment to creating passive income streams. With 80% of his real estate portfolio in commercial properties, he aims to ensure financial independence from stock market volatility.

The Silver Outlook: A Secondary Focus

While he expects silver to outperform gold, his primary focus remains on equities. He views silver as a secondary investment, preferring to channel his energy into stock market opportunities.

Cash Reserves: A Tactical Decision

Holding 11% of his portfolio in cash, he remains poised to seize opportunities as they arise. This strategy reflects a cautious yet opportunistic approach to investing, allowing him to act swiftly when favorable conditions present themselves.

Health Coverage: A Necessary Safety Net

In a world where health can be unpredictable, he maintains a medical cover of ₹40 lakh, underscoring the importance of safeguarding against unforeseen circumstances.

Warnings to Retail Investors: The Risks of F&O Trading

He expresses concern over the increasing participation of retail investors in futures and options (F&O) trading, likening it to driving an F1 car without a seatbelt. His advice is clear: without a solid understanding, investors should steer clear of F&O trading to avoid costly mistakes.

The Future of the Indian Stock Market

Looking ahead, he believes that the bear phase may be over, but the market will remain a mixed bag. While indices like the Nifty and Sensex have rebounded, his focus remains on individual companies rather than index performance.

Promising Sectors: Tourism and Healthcare

Among the sectors he is bullish on, tourism stands out, particularly with the government’s push for domestic travel. He also sees potential in healthcare, driven by increased health awareness post-COVID. While hospital stocks may currently be expensive, he believes they will perform well in the long run.

Stock Selection: A Bottom-Up Approach

His investment philosophy is rooted in a bottom-up approach, focusing on individual companies rather than sectors. He seeks out strong companies that can thrive even in challenging market conditions, emphasizing the importance of value and growth.

Finding Stock Opportunities: Everyday Observations

He encourages investors to look for stock opportunities in their daily lives. Noticing crowded airports led him to invest in an airline, while the surge in data consumption prompted his investment in telecom. This observational approach can uncover hidden gems in the market.

Investment Strategy: Sleep Peacefully at Night

When determining how much to invest in a stock, he advises investors to consider their comfort level. Over-investing can lead to anxiety during downturns, so he recommends a diversified portfolio of no more than 20 stocks for newcomers.

Conclusion: The Path to Wealth Creation

In a world filled with investment options, the Kedia Securities founder’s insights provide a roadmap for navigating the complexities of the market. His emphasis on diversification, long-term thinking, and a keen eye for opportunities serves as a valuable guide for anyone looking to build wealth through investing. As he aptly puts it, “Volatility is not a threat; it’s the tuition fee the market charges to teach you knowledge, courage, and patience.”