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stock picking

When markets are in a bear-grip, you often hear two phrases—cherry-picking and bottom-fishing. Both refer to buying potential winners taking advantage of market weakness.

We recently examined mutual fund portfolios to know if they are bottom-fishing of late. And if yes, what are they buying.

As you would know, mutual funds often have an overlapping portfolio.  For example, you will find stocks such as HDFC Bank, Reliance Industries or Infosys Technologies across mutual fund portfolios.

But do you know mutual fund schemes also have some unique holdings?

Barring a few prominent index stocks, Indian markets have largely been passing through a bear phase for the last 16-18 months. At a time when mid-cap and small-cap stocks have sent shivers down investors’ spines, some mutual fund schemes have been silently accumulating stocks in these categories.

Our analysis suggests that 21 stocks are present in just one distinct mutual fund scheme, thereby making them unique in the mutual fund universe. Moreover, respective mutual fund schemes are selectively increasing their stake in them.

Unique stocks in mutual fund portfolios…


Stocks that have witnessed consistent buying:

  1. Firstsource Solutions
  2. Himadri Speciality Chemical
  3. SH Kelkar & Co
  4. Tamil Nadu Newsprint & Papers
  5. Tata Coffee

Should you buy unique stocks mimicking mutual funds?

Well, do so at your own risk!

Mutual funds invest in unique stocks with the hope that they will become multi-baggers someday. If you choose to buy unique stocks that have seen incremental buying by mutual funds, you should also pay attention to their weightages in the respective schemes.

You will be surprised to know, no scheme holds in excess of 2.4% (of its portfolio) in a unique stock.

Keep this in mind if you are investing in unique stocks bought by mutual funds

While buying unique stocks, you should pay attention to a few other factors such as the price performance of the stock, its fundamentals and recent holding trends of the scheme. It’s also possible that a scheme is stuck to a unique stock merely because it is finding it difficult to offload.

You see, cherry-picking and bottom fishing may sound fancy but if done wrongly, might backfire! Stock-picking is a specialized job and should ideally be left to experienced fund managers that have seen ups and downs of markets and have an established record of identifying multi-baggers.

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We, Ventura Securities Ltd, (SEBI Registration Number INH000001634) its Analysts & Associates with regard to blog article hereby solemnly declare & disclose that:

We do not have any financial interest of any nature in the company. We do not individually or collectively hold 1% or more of the securities of the company. We do not have any other material conflict of interest in the company. We do not act as a market maker in securities of the company. We do not have any directorships or other material relationships with the company. We do not have any personal interests in the securities of the company. We do not have any past significant relationships with the company such as Investment Banking or other advisory assignments or intermediary relationships. We are not responsible for the risk associated with the investment/disinvestment decision made on the basis of this blog article.

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