Retaining Talent - is THE BIGGEST CHALLENGE in any profession. But you can't do much when people want to move out for whatever reason it is.
In Investment Management industry - it is this talent that dictates results. While no one is to debate the role of process, team work etc, it is the ultimate decisions - made by fund managers - which deliver results. And when such fund Managers call it a day - for what ever reason it may be, it is indeed a loss to the organization. But it could be good for both people - if they are able to evolve better than before.
Rarely Fund managers have a decent exit. One such has been for Mr.Pankaj Tiberwal of Kotak AMC. Infact he has left a farewell note - for the benefit of everyone.
Following is the gist of this letter:
- Joins Kotak MF in 2009
- In 2010 – Fund manager of Kotak Emerging Equity Fund (Rs.113 Cr) and Kotak Small Cap Fund (Rs. 127 Cr). Today KEEF is Rs.36000 Cr (2nd largest Midcap Fund in Industry) and KSC is 13000 (4th largest Small cap in Industry)
- 400 unique names identified and invested in 14 yrs
- Point to Point return – can be influenced by start date and end date
- Rolling return is better metric
- Investment philosophy:
- Trust takes time to build. Can be lost instantly. Reputation and Integrity – most valuable
- Avoid short cuts. Maintain ethical decision making.
- To Cut noise: Invert. Rather on focusing on where you can make 2x return over 1-2 Yrs, focus on where you can lose money over next few yrs. Maintain check list of factors for company selection. Avoid BIG mistakes.
- Process – more important. Fundamental analysis.
- Portfolio Construction – Gorilla to King Kong Strategy. Invest in 50 leading names – some could become King Kongs.
- To avoid:
- Avoid extreme portfolio allocation. Monitor Sector / Stock weight relative to benchmark
- Don’t Chase Momentum
- Prioritize valuation cosiderations
- Focus on earnings capacity rather than earnings itself.
- Stay Calm – Avoid overconfidence - Meditate 15 to 30 min a day
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