As part of our Investment Edge series, the Founding Executive Director of ATLAS Edge, Ms. Namrata Ashok Chotrani spoke to the prominent investor and financial advisor, Mr. Ramesh Damani about how to spot multi-baggers.
“When choosing multi-bagger stocks, look at under-appreciated industries and sectors.”
Mr. Damani emphasised the need to look at the basics - key financial metrics, performance barometers, and industry trends - when looking for potential multi-baggers. He insists on starting at a company’s market cap. Thorough research and the ability to spot underappreciated industries or still-emerging sectors are crucial. Such investments carry high risks. Investors must ensure that their portfolios are well-diversified to hedge against market volatility.
When considering the management structure in these companies, Mr. Damani cautions against “heroes or celebrity CEOs.” He says that company management should respect corporate governance and minority shareholders, have a proven track record of sustainable growth, and be responsive to investor sentiments. They help build long-term stakes that are critical for growth-stage companies.
His biggest advice was to hold onto stocks for the long term. Over decades, such investments become the engines for the investor’s wealth, driving valuation and portfolio stability. He spoke about some of his most profitable bets like Honeywell India, and some that did not work out, like MTNL.
Investors should not be scared of making mistakes. They should never be over-leveraged. As technology and industry change, it is important to err, learn, unlearn, and re-learn to keep up with the times.
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