The investment journey of a techie-turned-research-analyst

An avid blogger and educator, Merani is a Sebi-registered research analyst and the founder of a stock research firm, Analyse India.

Merani shared his portfolio details, investment strategy and financial journey for the special Mint series —Guru Portfolio. Edited excerpts:

What attracted you to the stock markets?

I’m an IT engineer and got interested in the markets in 2004. My uncle, N.S. Fidai, who is also my mentor, had just started as a full-time investor in the markets. So, I asked him to tell me about the Sensex. I became curious after I heard him discuss with his friend that the markets were going to fall, irrespective of whichever political party comes to power at the centre, be it the BJP or Congress. The markets hit a lower circuit the following week, on 17 May 2004. And that’s how my journey started.

I then learnt the technicalities of the markets from my uncle. After completing my engineering in 2006, I worked in an IT company for five-six months. Thereafter, I quit and, since January 2007, have been involved with the markets.

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Do you remember the first stocks that you picked?

I don’t remember those because I started with the futures and options segment. But, I invested in a lot of IPOs (initial public offers) at that time, and I started with the offers of NTPC and Indiabulls.

You started stock research services in 2007. Take us through that.

When I started in 2004-05, the internet was just about seeing a revolution. I used to write on Orkut communities about the technicalities of investing in the markets. So, I was learning and writing at the same time. Then somebody suggested that I should write blogs. So, I started Nooreshpicks.blogspot.com. I used to write one article a day, and till date have 3,000 articles to my credit.

Then I started writing newsletters and later, based on feedback from the readers, started providing training to new investors . A lot of these services kept on increasing based on the feedback.

By January 2007, it was very clear where I wanted to be because I was on the bench during my IT job. There was a plan B that if it did not work out for a year or two, maybe I would end up doing MBA.

What were your earlier misses?

After the 17 May 2004 market plunge, we expected another dip. So, we had resorted to short and cover strategy, but there wasn’t much of a dip. By the end of 2004, there was a massive rally, and in that initial period, we took a big hit. The lesson learned from this was that it’s not necessary to see a double dip. This helped in 2020 by not waiting for the second dip.

When did you start investing seriously?

From 2005 to 2008, I was purely trading. Even though investments were made for a year, they were all speculative in nature. In 2008, some of the companies which helped me make money—say five or eight times—got delisted. Luckily, there was a technical bias on the way down by May-June 2008, and I was totally flush with cash. So, I was able to handle the January 2008 fall. From 2008 onwards, I started meeting a lot of investors. I joined a Google group called InvestmentSuperGrowth, which is where I met a number of big refined investors such as Vinod Ohri, Kukkuji, Neeraj Marathe, Ayush Mittal and Gaurav Sood and many others in the last 10-12 years (list is long).

I learnt a lot from interacting with them. They were actually doing research and spending a lot of time in the market. Post 2008, I started looking at investing after understanding the fundamentals. For example, I came out with a tagline called Chor Bane Mor in 2014-15, which was basically looking at companies with changing governance. That was the evolution wherein I went from being a purely technical guy to being the one trying to mix it all.

What would be the current mix of trading and investing in your portfolio?

Generally, 60% of my personal investments do not move as easily, since the holding period ranges between 6 to 24 months, and at times even more. But the rest 40% is moving constantly and it is leveraged.

Take us through the schemes that you offer.

There are two types of research products we offer. First is Technical Traders Club and other is Quickgains (extreme short term), Technical Traders Club & Smallcap Folio is where we are equal weighted, and more diversified.

Basically, a single stock weightage would not be more than 8% allocation. Trading recommendations would have one to five months of holding periods, the Smallcap Folio could have 6-18 months of holding period.

You also have schemes on Smallcase platform?

We run three different major smallcases; Top-10 Technofunda, Top-10 Value, and Top-10 Insider Trading. Among these, the 10 stocks are equally-weighted. In Technofunda, the stocks are filtered based on parameters which are 80% technical and 20% fundamental, because if you like a stock fundamentally, it should also filter in the technicals, then only it becomes a buy. So, there is a more weight on technicals in terms of say acting. And in terms of screening, there are a lot of fundamentals.

The Top-10 Insider Trading portfolio is purely based on companies where there has been insider buying action as per regulatory disclosures. The Top-10 Value is something where there are more value-based cheap companies.

Tell us about your personal portfolio?

I’m always leveraged, and that’s the way I function. The leverage goes higher during momentum investing. So, my personal strategy is to actually outperform in a big way in a bull market, so that you can take a sharp drawdown of a bear market. I’m 100% invested in equity, which including leverage would go to 200-300%.

I don’t consider real estate to be part of my net worth as of now. I bought real estate a couple of times in the last few years, one in 2017, and one in 2021. But it is sort of a diversification rather than investing.

How many stocks do you aim to keep in your portfolio?

If you have more than 20-25 stocks, you cannot remember their names, forget about allocations. Typically, one should not go beyond 20 stocks.

In terms of market capitalizations, how are you placed?

It would be around 90% in small-caps and mid-caps. Apart from this, the derivatives part is purely large-caps. So, it is mainly small and mid caps.

How has your portfolio performed over the years, say on 10-year basis?

On an individual basis, it is very tough to say, because there is a lot of leverage. But generally, it would be closer to 20-25% (CAGR) if you take the whole leverage out of it. There have been periods where a single year has given 120-150%.

Are there any memorable trades that you remember?

The two trades, which really changed the game for me was between 2015 to 2017. I was interested in two parts. One was in an agrochemical company called Bharat Rasayan. I think it used to be 30-35% of my personal portfolio. Second was in the textile segments, which was closer to 30% of the portfolio, in KPR Mill.

There was also Garware Wall Ropes, which is not exactly textile, but technically textile. These three names ended up becoming three-five baggers in a period of less than two years.