Having studied the history of several asset markets across the globe, Photon believes that a flexible investment approach is necessary to generate the best possible returns under all market conditions. For this reason, we approach investments according to prevailing market conditions rather than with any particular style in mind. Our flexible approach also allows us to holistically view markets rather than view markets narrowly with one specialization. We believe that this holistic view is especially important since inter-market linkages have gotten very deep in the past several years. Therefore, we invest across asset classes and investment styles. In fact, our knowledge of various asset markets gives us deeper insight into potential opportunities, threats that may not be visible to single market specialists.
At the time of writing (late 2006), India offers unparalleled investment opportunities. The broad economy appears to be headed for an extended period of 8+% growth. India’s stock exchanges have a number of attractively priced high growth companies with great potential. The nascent real estate sector also has potential to appreciate dramatically from current levels. However, we also believe that capital can be used most effectively if the momentum and volatility in the market is used to trade highly liquid securities in a risk-controlled manner.
India is presently witnessing unparalleled growth and that the growth style of investing will outperform a value investment approach. In the earlier part of this decade, we were firmly convinced that India was a value market. This approach rewarded us tremendously. After a substantial cool off in asset prices, the value style will outperform yet again. Therefore, we are committed to remaining flexible with our investment style to take advantage of all market conditions.
In our analysis, there will come a time when a long only growth investment strategy will not generate positive investment returns. In fact, at some future point, the momentum in the Indian markets will reverse and create dramatically falling asset prices across markets. To maximize investment returns, Photon will adopt a net short stance as such a reversal becomes imminent.
Photon’s analysts continuously follow a number of sectors both from a long-term as well as quarterly perspective in order to capitalize on situations at an early stage. Our knowledge of several asset classes, macro economy and commodities enables us to understand several sectors and the opportunities within them. This enables us to find the right sectors at the right time and zoom in on attractive opportunities within those sectors.
In addition to sectoral research, we also focus on individual company research. Using various database screens as well as through our conversations with the investment community, we are alerted to various possibilities before the broader market becomes aware of them. We analyze these companies in depth from a quantitative, financial perspective as well as a qualitative angle. We then talk to management to understand their capabilities and vision. This process ensures that we are analyzing opportunities from all angles before taking a call.
Several of our investment ideas are based on our understanding of prevailing macro-economic conditions. We invest a lot of effort into understanding the global macro-economic picture and potential threats to its stability. We are continuously identifying possible future trends and developments in order to plan and execute our investments in a suitable manner. Not only does this help us plan our investment stance, but it also helps us identify specific investment opportunities resulting from macroeconomic developments.
Photon Capital Advisors Ltd
90A,Road No 9,
Hyderabad – 500 033
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