When there is good news you might not get good price says Anand Shah

If we find certain stocks that are overpriced then we exit those businesses, Anand said.

Either you get good news or you get a good price, unfortunately, we don't get a good price when there is good news, said Anand Shah, head of ICICI Prudential PMS and AIF investments, in an interview with Moneycontrol, highlighting the challenges posed by a sprinting market.

Asked about his entry and exit strategy, Shah said that the strategy needs to be “dynamic” and calls for frequent review of the portfolio. While it's great to have a portfolio consisting of businesses that can hold on for many years, he emphasised the need to manage dynamically.

He said the fund has an army of analysts who are on the lookout for new ideas. "If we find certain stocks that are overpriced then we exit those businesses", he added.

Asked about stocks getting outpriced quickly, and the fund’s strategy, the market veteran said that "While we are ready to pay some premium, we are not willing to pay unlimited premium".

He believes that good stocks aren't the cheapest and is willing to pay a premium for businesses that are run by competent management. He highlighted the importance of corporate governance and said that his fund while researching, evaluates stock valuations only when they are convinced about the business and management.

Speaking about the fundamentals of the ICICI Prudential PMS fund, Shah said that the fund is a growth investor and looks for sectors that have the potential to grow faster than the economy.

The second foundation he shed light on is a competitive advantage. For him, that's an extremely essential element to survive the cycles in the stock market. Last is the consolidation in the industry, a big driver of wealth creation.

Fragmentation, he said, is the destroyer of wealth creation. He backed his statement by referring to the telecom sector, where with fewer players, the profitability is likely to increase followed by an improvement in return on equity.

"Valuations, today, are not very cheap or expensive but one needs to be very careful while building a portfolio as there are pockets in the market where expectations are running high.”

He said that every company the fund invests in goes through ample layers of filtration. "Market isn't as easy as it was in March 2020 or June 2020 when you had the significant advantage of valuations and a lot of pessimism", Shah said.

For Shah, markets remain fairly comfortable in terms of valuations. "We are still holding on to our portfolio as we speak".

On markets touching an all-time high, he said that the macro environment is supportive and “that's just the beginning for us.”

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