Good morning my dear readers,

Today's email is largely around the topic of how investors can evolve with size as their journey goes from a retail investor to HNI and UHNI over the years.

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As we have discussed in the past that most rising stars of the investing world start out as small and midcap hunters and as their size increases over time due to compounding, they start facing serious dilemmas.

1- Their portfolio size starts becoming too much of a constraint to buy illiquid micro and smallcaps.

2- They don't get allocation in good IPOs as most IPOs in HNI category get oversubscribed 100-300x on average.

3- And as the bull market progresses into the 2nd, 3rd year and beyond, value investing opportunities keep diminishing very quickly.

(As the whole market starts to get over valued. I think PEG is a good metric to measure over valuation).

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So I have noticed that most of such rising, superstar investors start going into grassroot level of investing.

I know you must be thinking, what in the world is 'Grassroot level investing'? 😅

It's a thing.

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So, more and more big investors start taking extra risk and bypass the IPO process and try and acquire stakes in companies before IPO.

Pre IPO has become a hunting ground in bullish markets for the savvy, rising investors.

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And as investing becomes more and more cut throat, grassroot level investing offers hope to such investors who are in a position to take higher risk to achieve higher return.

(It's largely virgin ground and hence, good deals are available often too).

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And as we discussed earlier, we must try to be in auctions which other people don't want to be in.

So whether it's value investing, special situations or pre ipo kind of investing, getting an attractive priced deal is more important.

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I will talk more about this in the coming months but this is a thought for you to explore as your portfolio compounds and buying small stocks becomes difficult.

Ofcourse, important to note that pre IPO investing is significantly higher risk than normal market investing.

(Hence, always best to consult with your financial advisor first before you think of doing anything ever written in my newsletters).

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That's all for today guys.

By the way, I will be in Dubai from the 25th till the 27th. If any of you would like to catch up and understand more about Negen, just ping me 🙂.

Enjoy your weekend.

See you later, alligator 🐊,

Neil Bahal

Founder

Negen Capital

Disclaimer: This newsletter is for educational purposes only. While the newsletter discusses just general market insights and past case studies, still, the stock market is a very risky place which can result in losses.

Hence, always check with your financial advisor before acting on any contents of this newsletter

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No representation or warranty, implied or statutory, is made as to the accuracy, completeness or fairness of the contents and opinion contained herein. The information can be no assurance that future results or events will be consistent with this information. Any decision or action taken by the recipient based on this information shall be solely and entirely at the risk of the recipient

Again, investing in equity market has high risk. You must consult your financial advisor before making any stock market related decisions.

Negen Capital is a SEBI registered PMS & AIF.