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Launching a New Stockletter: Tortoise
The new stockletter would be focused on value stocks.
Over the past two years, the Indian market is showing a bipolar behaviour. Large-cap stocks are quoted at extremely lofty valuations while most mid-caps are quoting at throwaway valuations. Recently, Abakkus, an alternative investment fund, run by Sunil Singhania, former fund manager with Reliance Mutual Fund, wrote a piece on how there is a bubble in quality stocks. You can read it here.
We don’t know whether there is a bubble in quality or not but we can certainly see that many good quality small-cap and mid-cap stocks have been butchered due to multiple factors. Despite stable earnings, they are quoting at single-digit price earnings (P/E) ratio.
This is perhaps an opportune time for value stocks. Indeed we have been getting requests from our readers and subscribers for a list of such stocks to supplement the existing stockletters.
Hence, here is a new stockletter which will give you a shortlist of 20-25 value stocks. The first issue of the stockletter will have 5 names. We will add more and when more companies declare their September quarter results or we have a greater clarity on their business and financial situation.
Tortoise stock have been specifically identified for low valuation, high cash flows and high return on assets, not price momentum or earnings momentum. Hence, unlike the other stockletters we do not apply price parameters to identify Tortoise stocks. However, we think that once they are recognised by the market, the stocks will rally to their fair valuation. We will then use price patterns to look for an exit. Please use your own discretion to pick these stocks.
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Here are some steps to keep in mind while considering investing in these stocks.
What you would get: Each stockletter will contain a list of stocks and consists of three pages. The first page is a summary of the market trend and highlights any change in the list. The second page consists of one line summary of why we think the stock merits attention. The third page is a summary of its financials. When any new stock is introduced we will have a 3 pages of information on it.
It is important to know what you will not get. You will not get detailed research reports, analysis of quarterly results or notes on ongoing development, the kind that stockbrokers produce. We follow a system-driven or a quantitative approach to stocks. The approach is to offer a model portfolio.
Suitability: While we will provide well-researched names, entry and exit, these stocks will be appropriate only for those who have the experience of picking their own stocks and are comfortable handling their own portfolio.
How to use it: You should use the Tortoise stockletter mainly as a source of information, as a list of quality stocks shortlisted by us, which may merit further research and analysis. We are using our screening system to offer you a shortlist of value stocks. If you wish to act on this shortlist, please consult a registered investment advisor who would guide you about the appropriateness of these stocks, in conjunction with your risk profile and suitability of stocks as an investment product.
Tools: We have not integrated the investment tool (SIP and lumpsum) for Tortoise stocks and may not do so in future.
Combining with other stockletters: If you are interested in picking and choosing from different stockletters, you can buy more than one. However, if you do buy more than two, you will have too many choices and may end up asking us for a shorter and combined list of stocks from across the four stockletters. Unfortunately, we will not be able to guide you to a combined shortlist, even if you are a subscriber of our investment advisory.
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