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Stock

Samir Arora of Helios Capital should take his own advice

Samir Arora of Helios Capital is one of those fund managers who irritates the hell out of me.

No surprises, as I was one of the unfortunate investors in his Alliance New Millennium Fund.Like all naive investors, I invested at the FPO at 10 Rs/share.I exited a few years later at around 4 Rs !!

Now, I find our man on the cover of Outlook Business with a tongue in cheek article titled “Do Not Invest in Indian Equities”. In an article full of hindsight bias, he quotes various stocks which have gone up by 200%-600% since Dec 2008.Well, the timing of the month and year is significant as that was when the markets had more or less bottomed out.Hindsight bias, again !!

Its interesting to see how his own favorite stock fared since then.His favorite stock is Arshiya International as quoted in this interview to CNBC in Sept 2011 “The company that we like very much is Arshiya International  , which owns India’s first free trade warehouse zone and also the second free trade warehouse zone. This a very strong and completely new business, which India needed since long time.”

Now the markets have rallied big time since then but Arshiya is still at multi year lows.Today it hit the lower circuit with no takers for its stock.

Maybe Samir Arora should take his own advice seriously and stay away from Indian equities !

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Observations

Should fund managers declare their assets?

One of the astonishing aspects of the Indian Capital Markets scene is the abysmal size of the Indian Mutual fund industry.

The total asset size of Equity funds (including ELSS) is around 190,000 Crores Rs (around 35 Billion $) as of Nov, 2012. (source AMFI)

This is approximately 55% of the annual turnover of Reliance Industries !

While many people have blamed distributors/fund houses/Govt/SEBI for the mess that Indian MFs are in, one section that has been immune to criticism are the fund managers

There was a conference couple of years back where the panel consisted of fund managers.The moderator asked the panel about their personal asset allocation.It was shocking to hear that some fund mangers had less than 5% of their personal portfolio in equities.For most of them, their biggest asset was the house they lived in Mumbai !!

Its fairly clear that Indian fund managers don’t eat their own cooking and don’t have any skin in the game.

If ordinary muncipal corporators/govt employees are asked to declare their assets publicly, shouldn’t fund managers who manage thousands of crores in assets do the same?