 
Prashant
Jain ANOOP
BHASKER RITESH
JAIN |
Growth seeker At
times,ignoring valuations has helped Sanjay Dongre beat the Street Having spent more than a decade with the country’s largest fund house, UTI Mutual, Sanjay Dongre has seen it all. But if Dongre, who has degrees from the College of Engineering Pune and the Indian Institute of Management, Calcutta, has not got the accolades he deserves despite an outperformance rate of over 90 per cent throughout his fund management tenure, it is because of the long-standing policy of UTI Mutual not to project individual fund managers. Or blame it on the mixed performance of the plethora of UTI schemes that often buries the outstanding record of some. Dongre attributes his success to his growth style of investing rather than taking the value-oriented approach. “In developed countries, growth is scarce and, hence, one needs to focus on what is available cheap to consistently deliver good returns. But in a developing country like ours, there is abundant growth and, hence, there is no need to look at low growth companies” he says. And if the growth approach has paid off, it is because Dongre has not restricted himself from investing in stocks even though they appeared highly priced to begin with. “Stocks which exhibit high growth visibility will always look expensive, but often there is a good reason – that’s the underlying earnings strength itself. So, one needs to just ensure that the growth is on track. The stock will surely deliver,” says Dongre, who marries the twin factors of earnings growth and the quality of it to put a price tag on the stock. Be it in life or with investing, Dongre likes to be in control. He would like to be in the know all the time, especially when it comes to stocks he indulges in. He would not invest in a stock, of which he is blind about certain variables. That’s one reason why Dongre has consciously refrained from investing in global commodities such as metals. Sitting in India it is extremely difficult to get a grip of what is driving the global commodities market. Geopolitoical factors, demand situation in a whole lot of countries, supply situation in a multitude of companies and policy changes in a number of countries are difficult to track, leave alone the speculation part. “Thus, one may suddenly find that prices are moving in the opposite direction for reason(s) you never imagined before,” he says. So, Dongre focuses on commodities such as cement and sugar, where the variables are fewer and the domestic factors are the primary drivers. The chances of going wrong with domestic commodities are far lower than with global commodities. In the recent times, cement has been one of Dongre’s best calls. In 2004, he could foresee that cement companies were getting back pricing power and loaded his portfolio with cement stocks. In a year, they doubled and as cement companies continued to show robust earnings growth, the pace of appreciation only increased with the next round of doubling in less than six months. But then, one often runs the risk of missing out on big moves if one decides to completely ignore a particular segment. So did Dongre. He missed the steep rally in metal stocks from January-April this year, though six months down the line, Dongre has been vindicated as metal stocks turned out to be the worst hit after the May fall. “I like to take only risks that I can manage,” he says. Another principle that has stood Dongre in good stead is the Warren Buffet philosophy that good business often overrides most other factors. If the business is good and there is growth, one can ignore the management issues to certain extent. To
unwind when not in business, Dongre, who fathers two daughters,
prefers listening to Kishor Kumar’s melodies or being hooked
to the nation’s obsession – cricket.
• HOME Business Standard • FUND MANAGER • October 2006 |
