Superstar investors preference for companies with low or no debt

An interesting trend among superstar investors is their preference for companies with low or no debt, according to an analysis by Trendlyne.

For instance, Vijay Kedia’s top three holdings, Atul Auto, Tejas Network, and Elecon Engineering, which form half of his portfolio, either have minimal debt or are debt-free.

This strategy of combining low debt with high revenue growth has yielded results for him.

Mid and small-cap stocks, known for their higher risk-reward ratio, have delivered high returns to investors like Kedia. Two of his top three holdings have risen by almost 100 per cent over the last year.

Kedia’s net worth increased by 65 per cent and 40 per cent in Q1 and Q2FY24, respectively. Overall, his portfolio has grown by 88 per cent over the past year, making him the second-best performer after Rekha Jhunjhunwala, according to Trendlyne.

Rekha Jhunjhunwala leads the pack with a 209 per cent surge in her net worth. This steep growth is largely due to inheriting her late husband Rakesh Jhunjhunwala’s portfolio and consistently increasing her stake in Titan.

In addition, Titan and Tata Motors, her top two holdings, have risen by 24 per cent and 57 per cent over the past year.

Despite the high volatility in Q3 and Q4FY23, the one-year change in most superstar investors’ net worth has increased significantly overall. Their strategy of staying invested and adding investments when markets fell, has helped most superstar investors’ net worth grow in the past year, the analysis said.

The average revenue growth for the top holdings of Ashish Kacholia, and Anil Kumar Goel over the past three years has exceeded 100 per cent.

Consequently, their net worth has increased significantly, by 38 per cent and 35 per cent, respectively, in the past year.

Monish Parbai and Nemish Shah have seen moderate growth in their net worth due to the subdued performance of their top holdings like Sunteck Realty and Lakshmi Machine Works.

Sunil Singhania’s portfolio has 28 stocks spread across sectors. Two of his top three holdings have risen by over 100 per cent, contributing to his net worth rising by more than 30 per cent in the past year, as per Trendlyne.

In contrast, two superstar investors, Dolly Khanna and Radhakishan Damani, have reported a decline in net worth over the past year.

More than 95 per cent of Damani’s portfolio was invested in Avenue Supermarts which fell by 8 per cent last year.

Khanna, on the other hand, cut her stake in several holdings in Q3 and Q4FY23, leading to a fall in her net worth, the analysis said.