What Your Peers Are Investing In

Copycat investing, also known as coattail investing, is a strategy that involves mimicking famous investors. It is a viable option for those who want to see what other people are investing in. While the success of this strategy is mixed, there are techniques to increase your chances of becoming a perfect copycat investor. For example, it is important to establish the type of investor you wish to emulate and to conduct your own research. You can also check the shareholding pattern of companies, as every company discloses the names of investors who hold 1% or more of the total number of shares.

Research famous investors' strategies

Copycat investing, also known as coattail investing, is a strategy that involves mimicking famous investors. While the success of this strategy is mixed, there are certain techniques to increase your chances of becoming a perfect copycat investor.

• Follow credible, successful professionals: Stick to tried-and-tested money managers. For example, activist investor and corporate raider Carl Icahn has successfully invested in large stakes in companies like Apple, Herbalife, and Trans World Airlines.
• Look for accumulation: Focus on large-capitalisation stocks that are experiencing difficulties. Money managers who start accumulating significant positions in these companies signal their confidence in a near- to medium-term turnaround.
• Follow pros in different sectors: Diversify your copycat strategy by replicating investment ideas from professionals in various sectors. Don't put all your eggs in one basket.
• Conduct your own due diligence: Even when copying trades from the best money managers, it's essential to conduct your own research. Ensure that the stock aligns with your investment objectives and risk tolerance.
• Focus on fundamentals and management quality: Notable investors like Warren Buffett recommend focusing on a company's fundamentals and management quality before considering its stock price. Evaluate the quality of the company by reading financial statements, listening to conference calls, and vetting management.
• Be forward-thinking: Successful investors like Carlos Slim focus on the momentum of a company or economy and how it interacts with competitors. They invest for what will happen in the future rather than what's happening now.
• Have conviction: While diversification is essential, it can dilute your profits. Bill Gross, the co-founder of PIMCO, advises putting a more significant portion of your portfolio into investments you strongly believe in.
• Be patient: Prince Alwaleed Bin Talal, an investor from Saudi Arabia, demonstrated patience during the Great Recession when many of his investments took a hit. He held onto his investments, and his patience was rewarded as they recovered.
• Be wary of advice: Carl Icahn, an activist investor, warns against taking investment advice personally. He suggests using your own research based on facts from trusted sources rather than solely relying on tips from friends or the media.
• Let winners run: Dennis Gartman, a former publisher of "The Gartman Letter," advises being patient with winning trades and quickly cutting losses on losing trades. Even if you're right only 30% of the time, letting winning trades run and exiting losing trades promptly can lead to overall profitability.

Remember, while researching and emulating famous investors can provide insights, it's essential to adapt their strategies to your investment goals, risk tolerance, and time horizon.

Check block/bulk deals lists

Checking block/bulk deals lists is a great way to see what other people are investing in. These lists provide an overview of large transactions made by various types of investors, such as promoters, mutual funds, financial institutions, and foreign institutional investors. Block deals occur during a specific morning interval, while bulk deals can happen at any time during the day.

You can find these lists on financial websites, such as NSE India and Moneycontrol, which offer a comprehensive overview of bulk and block deals. These websites provide details such as the company name, the client, the rate, and the quantity of the deal. Additionally, you can search for specific names or dates to find relevant bulk or block deals. For example, you can search for "Balanced Fund" to find all funds related to that term or use quotation marks to find the exact phrase.

It's important to note that the data on these websites may be subject to change based on requests from members who executed the deals. Therefore, it's always a good idea to check multiple sources and cross-reference the information to ensure accuracy.

By utilising these block/bulk deals lists, you can gain valuable insights into the investment strategies of prominent investors and make more informed decisions for your portfolio.

Review shareholding patterns

Reviewing a company's shareholding pattern is crucial before investing in it. A shareholding pattern is a public record that details a company's ownership structure, including both promoters and non-promoters. It shows how the total number of shares is distributed among different investor classes, such as:

• Promoter and promoter group shareholding: Promoters are the founders who hold a majority stake and participate in key managerial decisions. A high promoter stake indicates their confidence and positive outlook on the company's future growth.
• Public shareholding: This includes retail and institutional investors, such as banks, foreign institutional investors (FIIs), and foreign direct investors (FDIs).
• Institutional shareholding: Institutions like banks, financial institutions, and insurance companies holding a significant stake is a positive sign of long-term growth.
• Non-public and non-promoter group shareholding: This includes non-promoter entities, such as individuals or corporate investors, who may hold a substantial number of shares.

The shareholding pattern provides insights into the company's capital structure and profitability. It is important to compare patterns across quarters to spot significant changes. An increase in promoter stake is generally favourable, while a continuous decrease or offloading of shares may indicate a loss of confidence. Additionally, a diversified shareholding structure is preferable as it ensures well-thought-out decisions that consider the interests of various stakeholders.

To access a company's shareholding pattern, you can refer to its official website, annual reports, or the website of the stock exchange where the company is listed.

Track portfolios using financial aggregator websites

Financial aggregator websites are a great way to track what other people are investing in. These websites allow you to see the portfolios of other investors and can provide valuable insights into their investment strategies. Here are some tips for using financial aggregator websites to track portfolios:

• Choose a reputable financial aggregator website: There are many financial aggregator websites available, such as Seeking Alpha, Empower, WallStreetZen, and Morningstar. Each website has its own features and benefits, so it is important to research and choose one that suits your needs.
• Link your investment accounts: To get the most out of financial aggregator websites, it is recommended to link your investment accounts to the platform. This allows the website to aggregate all your financial data and provide a comprehensive overview of your investments.
• Utilize the analysis tools: These websites offer a variety of tools to analyze and compare portfolios. For example, you can track the performance of your investments over time, compare your returns to benchmarks, and evaluate your asset allocation.
• Consider the risks: While it can be tempting to simply copy the investments of successful investors, it is important to remember that their strategies may not align with your financial goals or risk tolerance. Conduct your own due diligence and ensure that any investment decisions you make are suitable for your personal financial situation.
• Stay up-to-date with news and insights: Many financial aggregator websites provide news, research, and insights from industry experts. Staying informed can help you make more informed investment decisions and better understand the strategies of other investors.
• Take advantage of additional features: In addition to portfolio tracking, many financial aggregator websites offer other features such as retirement planning tools, fee analyzers, and investment checkups. These features can provide valuable insights and help you make more informed financial decisions.

By using financial aggregator websites, you can gain valuable insights into the investment strategies of others and make more informed decisions about your own portfolio. Remember to always consider your own financial goals and risk tolerance when evaluating the portfolios of other investors.

Follow investors on social media

Social media has become a favoured platform for investors to share their views on the economy and individual companies. Following prominent investors on social media can give you an insight into their views on particular sectors and industries, as well as potentially being the first to hear of any announcements they make.

• Choose the right platform: Twitter, now known as X, has emerged as a leading social community for discussing stocks and investing. People commonly share investing ideas, research and forward outlooks about individual stocks, sectors and the economy as a whole.
• Find the right people to follow: Look for investors who are respected in the industry and have a large following. These could include well-known investors like Warren Buffett, Bill Ackman, George Soros and Peter Lynch, or up-and-coming influencers on TikTok, Instagram and YouTube.
• Be cautious: Remember that even top investors don't always get it right. There are many variables that can affect the stock market, and following someone else's investment decisions without doing your own research can be risky.
• Do your own research: While it can be helpful to follow investors on social media, it's important to do your own research and make informed decisions based on your own financial goals and risk tolerance.
• Engage and interact: Social media is a two-way communication tool. Don't be afraid to engage with the investors you follow by asking questions, joining discussions and sharing your own insights.
• Be authentic: If you're using social media to connect with investors, be yourself and focus on conveying a positive first impression. Authenticity is key to building trust and attracting potential investors.

Frequently asked questions