Fluff Matters

By Ramesh Akkineni
from an article in Outlook Business
As an angel investor now, Suresh looks for businesses that can grow “seven or eight times within four years through capital infusion”.
The ‘Fluff’ Factor
His belief is that when a company in a happening sector grows in multiples, a buzz gets created about the company. That buzz, in turn, creates excess valuation in the company’s stock—or “market fluff”, as he likes to term it. “The market, in its own wisdom, gives it the fluff factor. Everybody then wants a piece of it, leading to short supply. That gives it the extra oomph to achieve my 12-15 times returns,” explains Chennai-based Suresh, now Chairman and CEO of Kalpathi Investments, a private equity (PE) fund with a corpus of Rs 400 crore.

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