INVESTING APPROACH

Investing is a game of statistical probabilities and those probabilities keep changing mainly on the basis of capital allocation policies of the management and competitive landscape. Of course, there are other macro factors that could potentially change such probabilities such as market risk, geopolitical risk, economic risk to name a few but at Soni Capital, we do not regard these factors as ‘risk’. Yes, such conditions can lead to short-term volatility causing sharp sell-offs in the market but as we have highlighted before, volatility is not risk for us. As our investment horizon is long (more than five years), we have the patience and fortitude to ride such volatility. Our focus is and will always be to ask if such market conditions have deteriorated the company’s fundamentals. If so, is it temporary or permanent? If it is temporary, perhaps it’s an opportunity to add more! If not, it is best to sell the investment and look for another opportunity.

Traditionally, most individual investors shy away from investing in small-mid cap stocks and only invests in blue-chip companies either  directly or via mutual funds due to their typical characteristics of being safe and stable investments. Whilst that is partly true, small-mid cap companies (we are not talking start-ups or companies with little history) that have been established for decades can not only provide safety and stability in your portfolio but are also in a sweet spot to launch themselves into the next phase of growth. And it is this transition that offers maximum capital appreciation opportunity for the investors.