IPOs and the art of creating alpha: What Aashish Somaiyaa says

Aashish P Somaiyaa, CEO at White Oak Capital Management said his investment management and advisory services company has been constructive when it comes to new companies coming to the market via IPOs. Somaiyaa said there is a general concern that with so much money coming to the market, valuations may turn rich.

In an exclustive interview to BTTV, he insisted that if that is the case, new businesses coming to the market should be treated as a welcome development.

Somaiyaa said "some really valuable businesses and some really valuable sectors have come into the market" over the past few years, including the entire electronic manufacturing and hospitals.

Before that, it was chemical companies coming in, he noted.

Somaiyaa said White Oak Capital Management is anchor investor in some of cases and has reasons to believe that it helped his portfolios deliver alpha returns.

"And I think that investing in an IPO, especially for a research-backed house which claims to do bottom-up analysis, I think that takes a lot of doing. It's not easy and it's not speculative because a lot of times, you know, people think that IPO investing is a bit speculative," Somaiyaa said.

He said when someone invests in companies, which have secondary market history, at least he has research and information and lot to go by.

"Whereas IPO is where the real scuttlebutt and real on-ground effort, plays out," Somaiyaa said adding that it adds to the portfolio performance.

"We have reason to believe that, IPOs where we have participated have added to the alpha performance of the portfolios," he added.

Somaiyaa said he believes more such IPO ideas are coming.

He said his company has about 35 analysts, tracking a thousand companies.

"We are very happy with the fact that there is heterogeneity in the market. Heterogeneity is great for alpha. New ideas coming in is also very good for alpha. We are constructive," Somaiyaa said.