Having led and been the CIO of Goldman Sachs, why did you leave Goldman Sachs?
To start on my own was something my parents had, I believe, particularly my mom, but also my dad, had drilled into my head all along the 19 years in the corporate world. I have to leave and start on my own.
Today I'm thrilled to welcome a market veteran, Mr. Prashant Khemka, the founder of the White Oak Capital Group, which has over 12 billion in assets under management. You said 2022 being the worst year of your life.
Till 2022, the performance was very, very consistent. Somewhere along the line, I started believing that our underperformance of any material magnitude is highly unlikely for us because of the way we manage what we call a balanced portfolio.
In today's conversation, we get into the nuances of how to think about market cycles, stock selection, and alpha generation. He holds one of the most disciplined and contrarian takes in Indian asset management. When everyone seems to agree, that is when you need to question yourself as an investor. So, how do you start training your mind to take contrarian bets?
We don't take contrarian calls.
Hi Prashant, welcome to the India Opportunity Show. Thank you for joining me here today.
Thank you, Shishi, for having me on the show.
It's such a pleasure to host you because, you know, even though you won't believe it, you will be termed as a market veteran, and you've lived through and navigated multiple cycles, not only in India, but you have a worldview, right? Having led and been the CIO of Goldman Sachs and also looked at emerging markets very closely. Let me start with why you left Goldman Sachs, because, you know, a lot of people who look at your resume will always have this question and wonder why would he leave such a lucrative opportunity.
Certainly, I've been asked this before, but I think when I look back, I'm surprised that I ended up spending as long in the corporate world as I did, and my family and friends would also be surprised from my college days and all. So since very early time, let's say since childhood, it was an aspiration or dream to start on my own.
Was something my parents had, I believe, particularly my mom, but also my dad, had drilled into my head. My dad had a small shop, so we were a middle-class family in a relatively wealthy neighborhood, and all the neighbors, you know, the wealthy ones, all had their own business of some kind, factory or otherwise. And so that was the expectation from my family, and that being the case, you know, all along the 19 years in the corporate world, all the time I was, it was in my head, okay, I have to leave and start on my own.
But the fact that it took 19 years is a long time. So that is at the bottom of it, at the core of it.
That's very interesting, and you know, I usually really love understanding your macro perspective also because, you know, you've looked at the US equities and emerging market equities as well. So from your point of view, as we stand today, what is your worldview? And because there, you know, there's this whole talk of US markets with the AI rally that is happening, it's completely on a tear. There's been a recent correction. People call India the reverse AI trade.
Right, and there is so much happening in the emerging markets. Some of the markets that you track closely, Korea, Taiwan, etc., have seen single stocks rally up significantly. How do we make sense of all of this as investors?
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It's a very, very exciting time. First of all, from a worldview or humanity view, whatever you may say, major technological... So obviously, the world's seen a number of technological advances and leaps. Yeah. And this is more than just an advance. It's so advances more regular, and then leaps are more leaps like internet was a leap. Yeah. Same way, AI, which is an offspring of internet in some ways, can or does seem to have the potential of being a leap.
And just like internet spawned a variety of businesses, like mobile phone, what we have now was unimaginable 30 years ago. Unimaginable something like mobile phone where you can not only speak with anyone else, it's a supercomputer on top of it, and you're connected online with everything. So, internet has spawned, and as an outcome of that, has spawned numerous businesses and made existing businesses do things very differently. Like one of my grandfather's favorite tasks for me was to get the passbooks updated in the banks, and he had a variety of banks where he had accounts. Now nobody goes to get the passbook updated. It's all on the fingertips. All that made possible because of the internet.
That we might see right now, all the negative aspects, always, the pessimistic argument, as many people have said, always sounds more rational and reasonable.
And always the negative or the downside. I was having the exact same argument, by the way, two, three days ago with my dentist while waiting for anesthesia to take effect. He was very pessimistic by his own admission.
And my point was the negative outcome, what AI might, what damage AI might cause to jobs and people's livelihoods is more easier to see because you can see the impact on something that is there and what impact AI can have, whereas new opportunities, new jobs, they will be new creations which are harder to imagine now. They don't exist right now.
As against the jobs that will be destroyed, so I can't think of a technology in the past, and I'm sure someone might point out to some, but I can't think of a technology leap in the past which has resulted in causing greater deprivation to mankind or humankind, right? And I think if AI, as it is made out to be one of the bigger leaps, I think it would create a bigger positive net impact on society, including on job creation in the years to come. So yes, right now everyone in the world is preoccupied, and maybe, and I hope rightly so, with AI. If you look at worldwide markets, the real bull market, if there is any, is in AI, obviously in AI-related stocks, there is, including in India.
Last two years, the market hasn't gone much of anywhere from mid-24 to mid-now, but you look at anything that is distantly in India, we have, you know, while overall it's called anti-AI because primarily the fear is that IT services would get badly hit, but there are some industrial companies, electric equipment and otherwise, which are benefiting from the overall boom in AI capex. So you've seen that in Indian market as well. Anything even remotely related to the supply chain of AI has done extremely well. Countries like South Korea, which has tripled over the last 12 months, or Taiwan, there too the rally is predominantly driven by companies that are linked into, plugged into the AI supply chain, and same is true elsewhere in developed market as well.
How long it continues, very hard to say. Sometimes I fear it's like deja vu all over again. I've experienced the dot-com bubble up close because I was investing money in the US markets. I often like to recall that I was a day-one investor in Google at the time. So very exciting time as well, but then resulted in a lot of damage as well. Not necessary that that would be repeated, but yeah, there are some very close similarities in some pockets.
So, you know, what you're saying is very interesting because these hype cycles happen with every leap, as you said, right? But when we think about how concentrated some of these bets are, and, you know, we were just talking about concentration versus diversification, we'll go deeper into that, but a lot of these AI rallies across the world are very, very concentrated in either single companies or just a handful of companies which are driving up the rally, right? What is your take on that?
So you're right, Shishi, that there are certain set of sectors which have seen sharp rallies. Though, by the way, there are certain set of sectors which have also seen tremendous damage. Remains to be seen, obviously. In the dot-com era as well, there were a set of sectors which did extremely well, set of stocks which did so. Cisco of that time, Cisco was at the heart of everything, routing all the IP packets as they were called. Today, the Cisco equivalent might be Nvidia. Yeah.
Yeah, Corning was, I think just over the last few months, Corning has crossed the highs that it had set in 2000.
So even then there were a set of sectors, and it's not unusual that when you see new technologies emerge which are expected to grow so fast and have such far-reaching impact that the beneficiaries, they would get repriced or rerated. Yeah. So that is what is happening right now. A lot of segments of the market globally, plus what has happened, Shishi, some of the segments in industrials, let's say, electric utilities.
Or transformer as a particular piece of equipment, or anything that goes in the grid. Utilities were expected to be very steady, 2-3% grower globally, if that, in line with GDP at best. All of a sudden, the growth has accelerated so tremendously.
That there just enough supply for years to, at least that is the expectation for years to come, there won't be enough supply. Memory chips, where South Korea dominates, was intensely competitive sector where there was no pricing power, oversupply, and now they just can't produce to keep up.
Produce enough, put enough capacity to produce 2 years, 3 years, 4 years down the line to keep up with this. So those sectors understandably have seen stock prices skyrocket, and other sectors like software, Accenture is down 50-plus percent year-to-date. Obviously, our Indian IT services also down, not as much as the US-listed companies. So US software index, if you see, is down big time. I've lost track because it's so volatile, but down probably not much different from what Accenture is down.
Obviously, things, markets are very real-time. Because they're volatile doesn't mean they're inefficient. In fact, they are efficient. The volatility is a sign of efficiency. So on a dynamic basis, real-time basis, market is trying to assess how this technology would evolve and what would be the positive or negative impact on different sectors and is impacting it, impact over the long-term cash flows and is reflecting. It's only natural to see, obviously, consumer staples don't get impacted. Healthcare doesn't get impacted, at least the pharmaceutical companies. Yeah, there can be benefits of AI, but not big impact one way or the other. So those companies are more business as usual.
So I know you don't like taking sectoral calls, but you know, when we having lived through a cycle like this before, how should one really think about alpha generation, right? Like one can risk everything on a very concentrated portfolio and then have damage in their portfolio as well. So how should investors be thinking about this?
Certainly. So look, as investors, if obviously I'm, we manage public money, but even if I were to do for myself, it would be somewhat different, no doubt, because risk appetite is different portfolio. But let me talk about the clients from a client's perspective, how we'll manage client portfolios rather than individually. So see what we need to deliver to clients. First of all, we start with the premise that equity markets are the best place to invest from a long term. So equity markets, I've said that markets in India would deliver, and markets worldwide tend to deliver nominal in the local currency, nominal GDP growth plus dividend yield.
And in dollar terms, if you translate, typically translates to 6 to 7% dollar return over very long time period. In Indian context, rupee terms, that would translate into low double digit, call it below double digit post-tax, above double digit pre-tax. Yeah. So that you can get in a passive index as well or ETF as well. So clients hire us to basically beat the market.
Now, how to beat the market? It's a very challenging sport. I often compare investing to a sport. It is the most competitive of sports. Like in India, cricket is supremely competitive sport. I think globally, investing is the most competitive of sports. Now, while different managers and teams may have different perspective, to us delivering consistently that outperformance is also an important element.
And we can achieve, I believe, both outperformance as well as consistency of outperformance through stock selection, and that's the only way we believe performance really can be generated. Top-down or market timing just adds to volatility. It's a zero-sum game over time, doesn't add value. It's a more, I shouldn't say more, but it's efficient from a market timing perspective. Markets are efficient.
No one can add value in our view. There's not such an efficiency that markets are overpriced, underpriced, you know, that you can time and predict. So to give you an analogy to explain that, let's say you can play a card game, we two can play, or let's say you can play a card game with a 5-year-old on seven up, seven down.
There would be no skill that would benefit you. You can lose against a 5-year-old as well. It's purely an outcome of luck.
Whereas another card game, which is bridge, where also an element of chance is there. If you get poor cards, you might lose. But if we two are a team and we two are the best team in bridge in the world, then over any evening of a 40-50 game match, if we are better than any competing team, then we would win.
So I think of stock picking more like the bridge game and market timing and top-down bets more like seven up, seven down. It's zero sum. There is no skill involved. So our perspective is that in each sector, if you were to think, market can be divided in large variety of ways. What is commonly known to even a lay person is like large cap, mid cap, small cap.
Or banking sector, IT sector, so on and so forth. But then there's growth value. There's import-oriented companies, export-oriented companies, so on and so forth. There are like hundreds of those classifications. So at least not that we are neutral in all of those classifications. There are sound reasons to be different from a stock selection mindset. Also, you might be different because where if you see more alpha stock picking opportunities in certain, let's say in small caps, it's a more inefficient segment of the market.
So you may be over, which we typically are, more allocation to small caps than larger caps compared to the benchmark. It's not because we believe small caps would outperform. It's simply because small caps are more inefficient. We believe over time we'll be able to generate more alpha, more outperformance. So small, mid, large, they should all deliver 10% return in the Indian market. Let's say by timing these all, you can't make any money that, oh, small caps are overvalued, go to large caps or vice versa. You can't make any money, but you can have, like we do, a structural over-allocation to small cap within reasonable. You don't want to go, otherwise you won't get consistency if you go too much in just one direction. But if you can extract more alpha from small cap, that means market return is 10 in each bucket. Higher alpha means higher total return.
And hence overall portfolio higher alpha. Same way, pick the best stocks in banking. Pick the best stocks in IT services. We are not taking a call that IT services is dead and let's stay out of IT services because of AI. Pick the best possible work that you can do at picking the best investment opportunities in IT services, which would outperform the rest of the IT sector with or without AI. So stronger executing companies that we believe would navigate the AI challenge. See, IT companies aren't going to zero. Now the business argument is whether the business would shrink or collapse, or like IT services companies would tell you, they'll thrive and flourish. AI is a huge, the best thing in their careers. All the CEOs would like us to believe.
Time will tell. But regardless of what happens to the industry, we have to find and be in the names that would outperform the rest of the industry. If you can do that in each sector, hypothetically, if you can do it in each sector, if you're able to beat the benchmark in each sector, then by extension, you'll end up beating the benchmark.
And in this case, you don't necessarily mean the incumbent or the market leader in this position, right? Because it could mean that an emerging player, like from small or mid-caps, is going to replace an incumbent as well.
Absolutely. And in conjunction with valuation. Sometimes the market leader may be very attractively valued. At other times, challenger might be more attractively valued.
So have you come across this dynamic in some of the new age IPOs that are happening? Because there are some challenger companies which are now getting to IPO stage. Do you think the indices that have been held by, say, banking, retail, FMCG stocks now will see a churn similar to what happened in the US back in the 90s? You know, Microsoft is the only company which has sustained for so long, but most of the other companies in the top 10 indices were replaced. So do you foresee that in India?
Yes. So churn in the index composition is likely to happen if India continues to, and it has happened since 30 years, maybe not as much as in the US, but Nifty composition today may be quite different than, you know, 30, 40 years ago. A lot of the names off the top of head I know are no longer in Nifty. And if the economy continues to grow at 6-odd%, then yes, you will see a lot of churn. A lot of these new age companies may no longer remain, like Microsoft is, quite a few of those companies are no longer new age companies in Dow as well. So you would see more of these companies. It only makes sense that you'll see more of those.
So when you are taking, you know, you are finding the best opportunity in every sector, what is the filtering process that you go through? I know there's an OPIN framework that you end up following. If you had to teach me very simply, how would you explain it to me?
Certainly. First of all, there's no, I always say it's an age-old sport. There is no silver bullet. Yeah, if you were to compare to football where the World Cup is going on or cricket, there's no silver bullet. You have to do a few things right and do it very persistently, and collectively these things you have to do better than anyone else to be the leader in delivering performance. So with that framework, what I'll say our approach, and again you would have heard that from me, as I said, it's like to have a healthy body, everyone knows you must eat well, sleep well, exercise, and have a stress-free life. It's very simple, but because it's simple doesn't mean it's easy. We all start with a cup of coffee in the morning, not with a glass of carrot juice, right? Though we all know what is better.
So simply put, what works we believe is to buy great businesses at attractive valuations. So we are looking for companies that are great businesses and are attractively valued. Now, what you call a great business, that is important as well. But there too, there's a lot of agreement. Nuances may be different, but how we see it is companies that have superior return on incremental capital, companies that are scalable, companies that are well-governed, and with strong execution. So these are all born out of the fundamental value equation that value of any business is present value of future cash flows. In short, it is even written as cash flow divided by R minus G. Right? So when you talk about what I mentioned first in the list, it's in no particular order, but what I mentioned as superior return on incremental capital. So superior return means the return should be higher than at least cost of capital.
So if you are, as familiar with obviously manufacturing businesses, if the return that you expect, cash flows that you expect down the line, if that on a return basis is lower than cost of capital to put the manufacturing plant, then that is value destruction, not value creating. And over a long period of time, you would not have positive cash flow. So if you're growing and your cost of capital is higher than your return on capital, then mathematically your cash flows would be negative.
This actually, my uncle used to say a lot, you know, as an entrepreneur himself, he used to be like, if I'm not able to generate 15% in my own business, why, or like if I'm generating 15 to 18% in my own business, why should I look at other companies? You know, he was arguing about how he shouldn't invest in equities because he can compound capital faster.
Yeah, he's very right. And whenever I meet with entrepreneurs and they say the same thing, like, you're absolutely right. The return that you'll be able to make in your business, you can't expect to make in equity markets. Generally speaking, obviously the risk is diversified because, look, many businesses that were considered to be rock solid, rain or snow or something, and there have been technological advances that have rendered them worthless. Yellow pages, I don't know whether you ever had to use them, but I have used them. Now where do you find yellow pages? Nowhere. Only online you can get them. Newspapers were considered for maybe a century or longer as the most stable of a business. Warren Buffett has applauded the newspaper business, but then with internet, you know, who would have thought newspaper businesses in late 80s or early 90s, nobody could have imagined newspapers going out of fashion the way they've gone out of fashion. Yeah. So in individual businesses, there's always that risk. Equity market, you diversify that risk, but you can't, and plus equity market investment are passive. You're making that money passively. Your uncle has to put his heart and soul into the business. So that is true that you can't beat the return on capital typically in a business. And if equity markets were to be able to beat the return on capital in any business, that business won't be of much interest to us because you are covering your cost of capital.
But I guess a lot of businesses do fall in that category.
Yes. Yes. And there are businesses that are not able to cover much more than the cost of capital, though if you don't cover cost of capital for very long, you'll go out of business. So superior return on incremental capital is imperative for cash flow generation. Scalability is about growth, whether it's market share gain, new products, whatnot, that's very important because that's the G in the equation, cash flow divided by R minus G. The higher the G, the greater the multiple you'll be willing to pay, and as a multiple of next year's cash flow, the value would be higher.
And then execution is important because otherwise you have great business ideas, but if you can't execute to deliver, they're just ideas which are a dime a dozen. And you'll see we were talking about IT services or even banking sector, you know, there were many licenses given in the late 90s, well, not many, but several licenses given by the regulator for banking. There are some that have grown to be the largest banks in India, and others we don't remember the names because they've effectively gone under or had to be taken over by the stronger ones. Yeah, so the differentiator was execution predominantly.
And finally, though oftentimes I say first and foremost is governance. If you are going to partner with someone for any business venture, you would want the person to be trustworthy, someone who would not siphon off money from your partnership. You would expect them to honor the proportionate share. So if you have 50/50, that 50% of profits and losses will accrue to each and so on. Now, if you're a partnership like 50/50 or something, you're at least deeply engaged and you can monitor what's going on and be more on top. But when you're a minority shareholder, 1%, 2%, not deeply engaged in the company on a day-to-day basis, all the more important that governance is of high standard or adequate standard.
Now, from a risk management perspective, there would always be companies in our portfolio which may not meet all these criteria to the highest level because that was one of the lessons from 2022, which was the worst year in my life. That all these companies that had all these characteristics, superior return, scalable, and strong governance, they were the worst performing in 2022. Yeah. And all of these characteristics did extremely well. So from a risk management perspective, you have to balance the portfolio, but otherwise this is largely what, to your question, the team looks for in a great business. And then valuation is very important. You have all these aspects, but you overpay, no matter what the cash flow growth is, but if you overpay, then you're not going to earn an adequate return on your stock investment.
So valuation is very crucial, and we adopt a very first principles-based, cash flow-based approach, adapted or enhanced, or well, I'll say adapted to align with our philosophy that I just mentioned in what we call OPINCOIN framework. So we don't look at PE multiples. We have actually a deep-rooted disregard for PE multiple on the team discussions and all. Nobody mentions what is the PE multiple of a company because they're afraid I'll come down heavily on them or other team members would come down heavily. But they've just grown accustomed to using what we call this asset-light free cash flow multiple. And you know, we buy when there is substantial upside and hold it as long as there is upside, enough upside.
You're not from the school of thought buy and hold forever. I think that's one of the most overrated things, buy and hold on forever. Why? I mean, if there are other opportunities that are more attractive, you're better off reforming that and redeploying it in other projects or other businesses or companies, right? So valuation plays a crucial role at the point of purchase as well as all along while we own the investment.
Yeah, you said a couple of interesting things that I would love to go deeper into. 2022 being the worst year of your life. Let's double-click on that because I would love to assess, like, understand what was the temperament that you had to build to be able to deal with something like that, where literally all the stocks you selected matched all the criteria yet were underperforming. And I guess, you know, why I'm asking this is because the last two years, no one's seen anything in their portfolios. And after COVID, everyone was sitting on 25, 30% returns, thinking that this is normal, this will continue, and it'll last forever. But, you know, there are companies which haven't delivered, and darling compounders which people have held for 20, 30 years are literally not moving or going for a downside. So let's talk about that.
2022. So till 2022, if I were to look back, my professional career managing public money, the performance was very, very consistent. Yeah, I mean, different people can have, looking upon the numbers, different perspective, but all the numbers I have seen, we had, and there's an important metric called information ratio, which is simply mathematically, it's the alpha divided by volatility of alpha. So outperformance divided by volatility of outperformance. And we had an outlier of an alpha of the portfolios, outlier of an alpha by magnitude, and outlier of consistency, and so outlier of information ratio because numerator was amongst the highest and denominator was amongst the lowest compared to the peer group.
and so information ratio of over one, well over one, which is very difficult to sustain over any meaningful time period. And we've done that from, if I were to count my prior experience at Goldman till White Oak, it was till '22, was approximately 15 years over one.
Somewhere along the line I started believing that underperformance of any material magnitude is highly unlikely for us because of the way we manage what we call a balanced portfolio. We don't take big macro bets. We don't take big sectoral bets. The small cap, yes, always the underperformance tends to be correlated with a small cap underperformance because we know consciously there is a small cap bias. Also, we know consciously there's a quality bias. So when quality underperforms and junk rallies, yes, we would tend to have somewhat of an underperformance. But again, like small caps, the quality underperformance also would be limited, is what our belief was. But going into the end of '21, I think the portfolio had drifted and that was a risk management flaw as well, or not flaw but a mistake or error on the part of the team and myself to let the portfolio drift so much towards quality.
That's very interesting. Let's double click on learnings from this time period because I think it can teach us so much more about temperament, discipline, how to act when you know markets are not rewarding your decision framework. How did you really, did you evolve from that experience and like what changed?
Certainly evolved in many respects personally as an individual, as a let's say fund manager or CIO, certainly evolved. So if I take the latter, how did I evolve? As always, I believe I had a more, so than a typical, or would be possibly in the one percentile or two, one percentile I would say, of managers who focus as much on risk management as well, particularly factor risks. And I did two years at State Street Global Advisors at the start of my career. One of those years was on the quant side and that exposed me a lot to the factor analysis. And I think that was very, very useful and has always been very useful in understanding risk from a factorial risk perspective in a portfolio.
And so I believe that we have always done a very good job at that, and that is the key reason why the consistency of, despite '22 hit of 9%, our now coming up to 19 years, well, coming up to 20 years in March of '27. I can claim, obviously I'm not seen every return, but I can claim, I can be proven wrong. If someone has the data, I stand corrected, but I believe we have delivered the most consistent return over the last 20 years, and that's because of our balanced portfolio construction approach, which, balanced portfolio meaning we are balanced, not neutral to zero, but we make a conscious attempt to be balanced on most of these factors.
Yeah, '22 proved that the balance, or the learning was the portfolio wasn't as balanced as I believed it to be, and we have to be more conscious of some of these factorial risks.
How does one do that? How does one balance their portfolio more? Because you know what you're saying, that quality and junk and balancing the two, there could be a risk that, you know, junk is junk at the end of the day, so it might hurt your portfolio, right?
So see, it's not that I ever believed that what we call, and junk is too harsh a word, but let's say so. What we do is on governance there is no reliable... so on size, obviously market cap you can list and you know even regulators define what's large cap, mid cap, small cap. And Barra risk model and all these risk models, they define, you know, it's simple, market cap is a quantitative figure, price to book is a quantifiable figure. Now governance is a very touchy-feely thing and you can't rely on somebody else's, you know, characterization of governance. And there isn't one actually, Barra doesn't provide one governance score, and those who provide, I won't name them, then we don't find in sync with reality.
Love to ask you, you know, because there is consensus around some sectors that, you know, these are the sectors for the next five, ten years. Let's talk about defense, transmission and power, energy. And yeah, so I think some of these sectors, because everyone has unanimously agreed that these are the sectors that will rally or these are the themes to be played. Now what is your viewpoint on this?
So see, our view is it's easy to identify, and obvious in many cases, to identify which sectors in the real world are going to do very well over the next three, five years. It may not always play out that way, but you can have a lot more confidence. So yes, today in the real world, very easy to say companies involved in defense would do very well over the next 10 years or 20 years. But whether stock market returns would do very well is an altogether different question because if it's already anticipated and more than anticipated, and what plays out is not as strong as what is currently being baked into the prices, then the sector might disappoint very big time, like has happened in the past in India as well. The dot-com we were talking about, a lot of companies continue to grow very, very well.
But from their, you know, levels that were there in early 2000, you didn't make a good return in many of those. But many other companies didn't. Like eBay, I don't think has delivered a good return. It has continued to grow and grow fast in real business, but the valuations might have far exceeded even the loftiest of expectations. So in the real world it's easier to say yes, defense should do very well, AI-related, all this capex-related should do very well. But if the price already bakes in all that and more, then the stock prices might not do well.
Yeah, here because it's very interesting double clicking on consensus versus contrarian, right? Because when everyone seems to agree on these sectors being the sectors to be behind, that is when you need to question yourself as an investor and really challenge where the herd is going, right? So how do you start training your mind to take contrarian bets? And just by the way, while we're talking about defense and AI beneficiaries, on the other side is also, right, sectors that people are very, very pessimistic about. Things may not turn, I mean, things may turn out bad for them, yet the stocks might do much better because what we are predicting is, you know, things might be not as bad as what is predicted. So now IT services getting beat up every day, maybe they do come under pressure but not be as bad all said and done as currently reflected. So but how do we take...
See, we don't take contrarian calls, we don't take pro or anti calls. So we do own enough of the industrial names which are beneficiaries of AI, and we do own enough of the disrupted names which will get hurt, and that's a conscious decision. In fact, we try hard to be balanced on both.
Yeah, that's such an honest confession. You know, most people will never want to admit this, right? And most fund managers want to give very, like, you know, they want to call where the Sensex is going to be, say, in the next three to five years, or they want to talk about certain sectors. But this is a very balanced viewpoint. If you really think about what you're saying, it's a very rational way to look at things. But most people don't want to hear this. I'm sure, like in 2022, when your clients or LPs were calling you, those weren't easy conversations to have, right? How did you explain it to people? What was their reaction to this kind of approach?
