I have come to realise, there are 4 pillars to the investment process:
1. Idea generation
3. Buying & allocation
Today’s post is about the first!
There are over 4000 listed companies in India alone, picking investments which can give you decent returns can by itself be a challenge, I have listed some ways you can pick quality companies from the available universe.
1. Quantitative screens : This can be a great starting tool to find interesting companies, you are very likely to tumble on great small / mid-cap ideas which are otherwise ignored and not followed widely by mainstream financial press the best screener for Indian markets is screener.in. you can also use the screener on the edelweiss website
2. Blogs : These are like gold mines, you will chance upon some of the best companies to invest in. The best part is that most of the initial research is already done for you, it’s an excellent starting point to dig deeper. I follow a multitude of blogs and really depend on them for generating new ideas.
3. Paid subscriptions : There are many paid online portals and blogs offering subscription based recommendations, this is money well spent. Some of the ones which are really good are blog.rcfunds.com, theequitydesk.com, equitymaster.com, katalystwealth.com etc. In addition to this there are also magazines one can subscribe to, I subscribe to capital mind, often it has decent ideas to offer.
4. News & exchange filings : Often mainstream news and exchange filings, can throw up interesting ideas. One can get a good idea of future plans of the company, buybacks, splits etc.
5. Industry sources : Sometimes you may have industry network which could lead you to discovering interesting ideas often these can give you very good insights to the business model of the company and its management
6. Observation : This is the most underrated source to generate ideas, there are so many products we use on a daily basis whose companies are listed, Peter Lynch, the legendary fund manager made some of his best investments this way
By no means is the above list an end, ideas can come from all kinds of sources, however this can serve as a decent starting point.