Beta- Analyzing mutual funds

Guru Prasad -
 The risk of any investment made always depends on the volatility in the following investment. If we can have a factor that could tell us about the volatility of a investment and help us judge our risk and corelate it with our capability to take risk, how would that be? Well Beta factor is one such factor that could help us know the sensitivity of our stock or portfolio fund that we have chosen to invest. Beta ratio:- Understanding Beta:-  Beta is a metric used in fundamental analysis to determine the volatility of a stock with comparison to the overall market that has a fixed beta ratio of 1 always. Stocks or funds that are ranked with a beta ratio above 1 generally tend to fluctuate more and hence give access to more risk but yielding higher returns too at the same time if gone in favour. While the risk is slightly less in the funds with beta ratio below 1 they give less but yet stable return on investments generally. Hence, the beta factor can be said as a risk- reward factor, helpi
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Share holdings of a strong large cap stock

Guru Prasad -

 Share holding of a company could be a really good criteria to understand the strength of any company and make your investment more secure. But what do I mean by share holdings? Yes, obviously it does relate to the percentage of holding the promoters have in the share. A very less holdings from the promoters could always be dangerous. Moreover this most importantly the decrease in promoter share holding could be a symbol of the companies reducing assets or funds. The year on year share holding pattern hence plays an very important role in the analysis of a stock. In this blog let us have a look at the pattern of share holding and its survivable capacity of few large cap stocks in particular. 

Given below is the share holdings pattern of one of the most well known stocks in India:-




The following stock is a large cap stock which has a 72.19% holdings by its promoters even after such a long period of time and hence it shows that the company is in safe hands and hence it has been continously growing over the years and has been delivering good return on equity and also been delivering a good dividend yield. But, does this mean we shall start looking for all those stocks with  70% promoter holdings? No, a large cap company also stands good with a promoter holding of just 12-13% for companies like infosys. But, when we look at this stock it has been doing a stock buyback every year which is increase the companies stakes of the promoters. Hence it its a well performed stock. 


But yet if you take my suggestion I will suggest you to look for shares with atleast 30% of share holdings. But does the promoter holding only matter. No, we also have to look for the Foreign institutional investors interest for a stock when it comes to a large cap or a midcap stock. The increase in stakes of the foreign institutional investors is a huge positive sign for any company.

  

Look at the above graph. The above graph is the quarter on quarter share holdings graph of the well known stock asian paints. It has been growing with time and hence the stock has also shown a significant growth. The diis share holdings pattern is also something that you should be looking for but if you take my opinion these are the two main things that you shall look for in the share holding pattern. Now given below is a impressive share holding pattern of a company that I like. Well, I won't be telling the name, but it's just a good example of the holdings.











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