What is the difference between timing the cycle and timing the markets?
Timing business cycle is dependant competitive dynamics of respective industries and sectors. Business cycle expands when competition reduces and hence profit margin expands, and declines when competition intensifies. Increase competition in Q-commerce for instance has hurt
profit of Zomato etc and thus driving down business cycle. A timer of business cycle studies these aspects and invests when competition reduces and sells when competition becomes unhealthy.
Market timer however looks at stock price momentum and sells based or buys a stock-based stock
price performance without any regards for fundamentals.
How have you changed your portfolio composition of AGOS-1 during this volatile market?
We have reduced our small cap exposure to 27% by end of Jan 2025 from 36% in Dec 2024. We have raised rage cap exposure by 200bps and have increased midcap exposure by 200bps.
We have increased exposure to financial by 300bps through addition of a leading NBFC. While our industrial exposure is intact at 23%, we have shifted from cyclicals to consumables and several of industrial names are actually manufacturers of AC and fans etc, which get classified as industrials instead of being labelled as consumer discretionary. We have slightly trimmed healthcare and IT
exposure by booking profits.
Do you think the market is becoming quicker at responding to narratives, leading to faster market cycles?
Market cycles possibly have become shorter and are changing every 1.5 to 2 years. At the same time markets are becoming less volatile. Key reasons being that corporates are no longer indulging in capex binge through leverage. Cleaner balance sheet is allowing corporates to time
business cycles better. SEBI regulations in curbing speculation is also keeping market in better
health than past bear markets.
You have achieved over 30% returns in CAGR in the past 5 years (as of Dec 2024) wherein the benchmark has given 17% during the same period, what drives the Alpha here?
Our alpha is mainly due to stock selection and greater emphasis on investing in high growth stocks at reasonable price.
How have you positioned your portfolio with respect to the Budget 2025, what are the sectors in focus?
We have shifted to consumption themes. We are mainly invested in discretionaries and not much
in consumer staples.