Thematic Study | December 2016
21ST ANNUAL WEALTH CREATION STUDY
(2011-2016)
F
HIGHLIGHTS
CUSED INVESTING
Power of allocation in Wealth Creation
Stock allocation (how much to buy) is a powerful tool for portfolio
performance, but is under-researched vis-à-vis stock selection (what to buy)
Kelly's formula offers 3 insights for equity investing: (1) Look for asymmetric
payoff (2) Create edge (3) Bet big
Opportunities for big bets come seldom; Focused Investing is a sound strategy
to capitalize on them
Keys to successful Focused Investing are: (1) Clear portfolio goal (2) Superior
stock selection (3) Rational allocation (4) Active monitoring
Disciplined practice should lead to exceptional returns rather than
acceptable returns
"Bet seldom, and only when the odds are strongly in your favor, but when you do, bet
big, hold for the long term, and control your downside risk."
– From the book
Concentrated Investing,
by Allan C Benello, Michael Van Biema, Tobias E Carlisle
TOP 10 WEALTH CREATORS (2011-2016)
THE BIGGEST
Rank Company
1
2
3
4
5
6
7
8
9
10
Wealth
Created
(INR b)
2,637
1,475
1,266
1,197
1,169
948
819
760
742
682
THE FASTEST
Company
Ajanta Pharma
Welspun India
Eicher Motors
Kajaria Ceramics
Vakrangee Software
Bajaj Finance
P I Industries
Symphony
Amara Raja Batteries
Aurobindo Pharma
5-Year
Price
CAGR (%)
121
88
70
66
63
59
58
56
56
50
THE MOST CONSISTENT
Company
Appeared
in WC
Study (x)
10
10
10
10
10
10
10
10
10
10
10-Year
Price
CAGR (%)
30
26
25
23
22
21
20
20
17
17
TCS
HDFC Bank
Hindustan Unilever
ITC
Sun Pharma
Infosys
HCL Technologies
Kotak Mahindra Bank
Maruti Suzuki
HDFC
Asian Paints
Kotak Mahindra Bank
Sun Pharma
Titan Company
Bosch
HDFC Bank
Axis Bank
Dabur India
Nestle India
Cummins India
Raamdeo Agrawal
(Raamdeo@MotilalOswal.com) /
Shrinath Mithanthaya
(ShrinathM@MotilalOswal.com)
We thank Mr Dhruv Mehta (Dhruv.Mehta@dhruvmehta.in), Investment Consultant, for his invaluable contribution to this report.
4
Investors are advised to refer through important disclosures made at the end of the Research Report.