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Our investment philosophy and frequently asked questions

1) What is your investment philosophy?

We are value investors. We will look at value buys, mispriced bets, turnarounds, contrarian bets. We will only invest where we find value. This requires an understanding of the underlying sector, understanding the balance sheet and financials, forecasting growth possibilities, and arriving at intrinsic value. Our endeavour is to buy companies where the current price is below the intrinsic value. Our endeavour is to outperform the market during the bull as well as bear phase of the market.

2) How do I subscribe to the services of Aurum Capital?

We are not taking new subscriptions for any services and there are no plans to start them.

3) How your Value Investing Research Services work and how do you maintain transparency? 

We have Buy, Hold and Exit tabs on our website for the paid subscribers in the Current Recommendations section. If a stock price goes above a certain percentage, it automatically moves into the Hold category.

A new subscriber is suggested to buy stocks from the Buy category and not from Hold. Price is extremely important for us to get the value. We believe in “Price is what you pay; value is what you get”.

If the stock from the Hold category corrects and comes back into the buy then the new subscriber can buy that. The buy price range is also provided against each stock. We may have multiple price range for each stock. One can view that by clicking + sign against the stock. Allocation to any stock is to be decided by the subscriber.

The most important aspect is that our stock details remains the same as displayed on the screen for all starting from the beginning. We do not remove any exit stocks from the services even if we have to book any loss. Also, while calculating any gains/losses we take average price, close to our recommended price and not the lower end of the price range while calculating gains and the higher end of the price while calculating losses. We never do that.

4) How will the subscription service work?

We will be publishing research reports to our paid subscribers online on our portal. We will be providing a price range against the stock name to buy.

On the Current Recommendations page (only for subscribers), one can track the stock recommended along with the research report, subsequent updates on the stocks, and also exit calls, if any. We inform any changes in the Current Recommendations through email. The subscribers will have to visit the section to get details of the changes.

5) How many stocks do you recommend in a year and what is the frequency of your recommendations?

We give about 8-10 recommendations (buy/add/reduce/exit) a year. This includes the existing recommendations in the buy zone when a new subscriber joins in or any changes. We give periodic updates on the recommendations.

6) What kind of stocks do you recommend?

We are market-cap agnostic. We suggest stocks that are above a threshold market-cap with sufficient liquidity.

7) Who should buy your services?

  • The investors who have a minimum investible amount of Rs 10 lakhs or above to invest (over a year) should ideally subscribe to our services. At this minimum amount, it may make economic sense.
  • The investors who are planning to invest for a minimum of 3 years. Our services might not be suitable for investors who have a short-term horizon of fewer than 3 years. Our services are suited for long-term investors.
  • Investors who understand that during corrections and bear markets, our stocks can turn negative, though our endeavour will be to protect the investment of our subscribers with a fall lesser than the market during these times.

8) How many times you would be giving updates on a stock idea under coverage?

We give periodic updates as and when necessary. Similarly, we will be giving exit calls in the recommended investments. Updates will be given till your subscription is active.

9) Should I buy a stock if it has gone beyond the buy price range suggested by you?

We do not recommend buying a stock going beyond the upper price range. Such stocks are in Hold tab. However, if the stock is in Buy Zone (even if it is below the lower price range) one can buy the stock. The final decision whether to buy, hold or sell any stocks remains with the subscriber.

10) What is to be done for stock recommendations given before I joined?

For subscribers who joined after a recommendation is given, we suggest adding only in the Buy range, provided we have not given an Exit call. The final decision whether to buy, hold or sell any stocks remains with the subscriber.

11) Do you look at valuations or market momentum?

We only look at valuations as our core philosophy is value investing.

12) Do you give any guaranteed returns?

No, we do not promise any guaranteed returns. Equity investing involves risks, especially for shorter terms and subscriber must understand these risks.

13) How many multi-bagger stock ideas would you give in a year?

Multibaggers are not planned. They happen during the course of investing. This requires holding and staying put with your winners as long as they are not overpriced.

14) Do you give price targets for your recommended stocks? If no, why?

We do not keep a biased view with a preconceived price target in mind. We should evaluate the stock as it moves up or down with fundamentals and valuations in mind. This evaluation is a continuous process. We should keep our approach flexible and that happens only if we are not biased with a price target.

15) Would you be also recommending any microcap, penny and SME stocks?

We are market-cap agnostic. But we avoid penny stocks. We will be having a threshold market-cap for our recommendations. We will also be considering liquidity in the stocks we recommend. The illiquid stocks have high impact cost and it might be difficult to sell them.

16) What are the subscription charges? What plans do you offer? Are there any other charges besides the subscription fee?

We are not taking new subscriptions for any services and there are no plans to start them.

17) Will recommendations come in the form of research reports?

Yes. We will be publishing research reports on our recommendations. We will try to make them, simple and easy-to-understand. We will be doing both qualitative and quantitative research. That includes understanding financials and keeping track of the business on an ongoing basis.

18) What returns can one expect from the recommendations?

Our basic philosophy is to look at stocks that have a potential to double in 3 years in the mid and small cap space. For large caps, our return expectations are 15-20% CAGR. But, it does depend on market conditions and company performance. We will actively be tracking both. However, we do not guarantee any returns.

19) Can the stocks recommended turn negative?

Yes, our stocks can definitely turn negative if there is a correction in the markets or during the bear phase. The stocks can also give negative returns if the company faces any headwinds, disruption in its business model, or is not able to execute its plans. The volatility exists in the stock markets and that is why we suggest having a long term view of the markets. In long term, the chances of losing money reduces significantly if stocks are fundamentally good backed by good management and acquired at decent valuations.

20) Will you be recommending when to sell a recommended stock?

Yes. We will be suggesting when to fully exit or reduce our recommended stock. Updates will be given till your subscription is active.

21) When will my account be activated?

We are not taking new subscriptions for any services and there are no plans to start them.

22) How will the Investor Forum work?

The investor forum will be made available for the paid subscribers. But admin reserves the right to respond. If we find queries which are repetitive in nature or queries related to technical analysis or market momentum, we may choose not to reply. In general, we would also avoid queries relating to non-recommended stocks in the Investor Forum. There are 5000+stocks and we may not be covering all. The Investor Forum feature is only for the paid subscribers. Admin may also allow other subscribers to respond to a question.

23) How do stocks move between Buy and Hold or vice versa?

If the movement of a stock between Buy & Hold or vice versa is automatic by the system then it happens based on the end of the day's closing price. If a stock has an upper limit of e.g. 60 and yesterday's price of the stock is 62 then it will be in Hold but today's closing comes at 59 then it will move to Buy category at the end of the day. The upper price range is always known to the subscriber so it is not a new recommendation. We do not notify separately if this is a system based movement based on the closing price range. This way we avoid cluttering our subscribers. If you want to be notified then one of the ways is to create alerts in third party system or broker's website.

If the movement is not based on the closing price of the day but based on any new recommendation by us then we notify the clients first time through an email. In such a case there is a bell sign in current recommendation against that stock and if we click on that bell sign then it gives the additional info to the subscriber about the changes incorporated.

If stock's current price goes below the lower range then also the stock remains in the Buy zone only and one can buy the shares unless we have informed otherwise. eg if the buy range of a stock is 190-220 and currently the stock price is 185 which is below the lower range of 190. In this case also the stock remains in the Buy range and one can buy it. If we have asked not to buy below lower range then we inform about it separately to the clients and the stock is pushed manually in the Hold zone in such a case with a comment against the "Bell" sign.

24) What should I do if there is a correction in the price of the stock in our coverage?

The investors should not be worried by the price movements, either side. We keep on monitoring on an ongoing basis the business performance of the companies under our coverage. At the same time, we prefer not to react on the short term price and sentiment changes. We also prefer to give more time to the management of the company to perform. Essentially we do not react after each quarterly results. If we have to take any action then we inform our subscribers.

Also, if investors have the room to add the stock which is in Buy tab then correction is a good opportunity and one should use it. But it purely remains the subscriber’s decision.

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