Equity Intelligence, the Kochi-based portfolio management company, is all set to offer Extreme Value that aims to generate high return by investing in select, beaten down and ignored stocks with multi-bagger potential.

Mr Porinju Veliyath, the Portfolio Manager, said unlike the normal portfolio schemes that invest in 8-10 stocks, Extreme Value PMS would invest in 15-20 stocks that would give it more leverage in terms of performance. Some of the stocks may underperform, but many could outperform. “Investing in undervalued stocks has always been our method; here, we spice it up with a certain element of risk,” he said.

The Extreme Value investment strategy was suitable for the current market conditions. Investors should take a longer term perspective of two to three years while investing in this product. The company would charge three per cent exit load for withdrawals and termination within two years of investment to discourage short-term investing, he said.

He pointed out that only 10 per cent of India's 5,000-plus listed companies are fancied by FIIs, mutual funds and other large investors due to liquidity concerns. Of the remaining small enterprises, some were tapping India's competitive advantage, augmented by strong intellectual capital, immense wealth of natural resources, a world-class banking regulatory system and a growing services sector, he added.

He pointed out that many smaller companies in India were highly undervalued; their valuations could not be explained by the normal nature of declines. Besides, a cloud of negativism surrounded their operating domain. Investing in these stocks with meticulous research made sense in the current market scenario. The company would explore and understand the reasons for such terrible undervaluation and the prospects for a turnaround of such negative factors before investing.

The company will accept Rs 5 lakh for resident Indians and Rs 15 lakh for NRIs, considering the opportunity in Indian markets.

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