Portfolio for December 2010: Edelweiss: Top 10 to buy and short

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Portfolio for December 2010

Top 10 Long-portfolio stocks 

1. Bajaj Auto
2. Tata Consultancy Services
3. Crompton Greaves
4. Lupin
5. Mahindra & Mahindra
6. Asian Paints
7. Tata Motors
8. Sun Pharmaceutical Inds.
9. Ranbaxy Laboratories
10. Ambuja Cements

Bottom 10 Short-portfolio stocks

1. India Cements
2. Indiabulls Real Estate
3. N T P C
4. Housing Development & Infrastructure
5. Sterlite Industries (India)
6. I V R C L Infrastructures & Projects
7. Financial Technologies (India)
8. Reliance Infrastructure
9. Unitech
10. Punj Lloyd

Multi Factor Model

Edelweiss multi factor model aims to diagnose right factor momentum to out perform the
benchmark by earning the alpha gains. Active investors like hedge funds, institutions, and
portfolio managers have been known to effectively profit from similar strategies. Considering
the volatility in equity markets, such an alternative investment can be effective in diversifying
the allocations and maximizing returns. Investment styles may be long portfolio, long
portfolio–short Nifty, or long–short portfolio.

Market in a bull run may augur well for a long portfolio style of investment, while in an
unstable market a long portfolio and short Nifty would be the preferred investment strategy.
In case of an uncertain market with negative bias, the long–short portfolio style of
investment is preferable. These strategies seem to be generating good returns on a
consistent basis and thus can be a preferred one during volatility where negative cues clearly
seem to outplay positive ones.



In isolation, none of the factors outperform the broader index on consistent basis. Single
factor effectiveness can vary over time, depending on the prevailing market regime and no
single factor works consistently for every market condition. Fund managers can mitigate
challenges of timing style & sub-style cycles by engaging in active style management.
Discerning inflection points of style & sub-style cycles is difficult. Employing a more robust
mechanism to capture the prevailing style may help capture more returns.
Assessment of various styles & sub-style is necessary to better understand the implications of
equity allocations regardless of cycles, while increasing diversification.
Various permutations of styles can be explored to optimize the diversification and return
objectives of fund managers. Given the unpredictable nature and recent magnitude of style
cycles, fund mangers may be better served by choosing multiple investments within a substyle
category where characteristics and behavior together are complementary.