There are so many outperforming stocks, missing one shouldn’t worry fund managers: Samir Arora

Samir Arora said that “very rarely” have they as fund managers outperformed even the 150th best-performing stock in the index.

There are so many opportunities in the market that not picking one good stock won’t change a person’s fortunes drastically, according to Samir Arora.

The founder of Helios Capital, in an interaction with Moneycontrol's N Mahalakshmi, said that fund managers should therefore not worry about missing a stock because the number of outperforming stocks every year is huge.

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He was explaining why he was optimistic about L&T in the infrastructure space but was not so keen on the other big names in the sector.

Arora cited one slide that the company keeps including in their presentations.

“150 companies do so well that owning the 150th company is a blessing,” he said.

Arora said that “very rarely” have they as fund managers outperformed even the 150th best-performing stock in the index.

“Most fund managers mostly never outperform and even I outperformed only two to three years out of the 18 years,” he said.

“That means the fund is not able to outperform the performance of the one-fiftieth best stock of our market and even the US guys (fund managers) can't (beat the performance of the stock that is ranked so low) because the top one-third do so well. That itself is a good opportunity,” he added.

Arora said that this proves that an investor does not necessarily have to chase a few ideas because so many stocks do well.

“If you don’t like one stock, it should not change your life because it won’t be the only one which does well,” he added.

Also read: Here’s why Samir Arora considers L&T to be a good buy

Helios Capital’s investment philosophy has always seen a robust portfolio as having two kinds of stocks, ones that offer high confidence in reasonable returns and others that offer reasonable confidence in high returns. The first group consists of consistently performing companies with clear strengths, significant size of opportunity and high visibility of earnings. The second consists of those that give superior returns from early discovery and re-rating from meeting expectations.