ET Intelligence Group: The Life Insurance Corporation ( LIC ) of India has picked up stakes in companies such as Swan Energy, Granules India, Rajesh Exports, Omaxe India, Future Lifestyle, Tata Coffee and Gateway Distriparks at elevated prices at a time liquidity dried up at smaller counters making exits difficult for many HNI investors, data compiled by ET Intelligence Group showed.This is in contrast to a strategy of avoiding small companies that LIC spelt out to ET in February.“In the past three years, we have taken a conscious decision to invest only in the BSE200 companies. But you should know that LIC is an old institution and there are legacy investments about which there is nothing much we can do,” Hemant Bhargava, managing director, LIC, had told ET earlier this year.Earlier, India’s largest fund had come under the radar of market watchers for its questionable judgement over investments in several stocks shortly before they crashed. These included shares of companies such as Vakrangee , Gitanjali Gems, Amtek Auto, Mandhana Industries , Electrosteel Casting and Opto Circuits.In the aftermath of such an experience, it is surprising that India’s largest fund decided to invest in smaller companies in a downward trending market. LIC’s total investment in Indian equity is near Rs 6 lakh crore and these recently acquired stocks, totally near Rs 2,000 crore, won’t significantly alter the performance.“With such a big size, buying shares of small companies wouldn’t make any difference to its performance. I don’t understand its philosophy in buying small companies. It should rather focus on bigger companies with high corporate governance,” a mutual fund manager said on the condition of anonymity.“Not selling shares of smaller companies is also a decision,” he added in response to LIC not selling its legacy holdings in smaller companies. For instance, LIC more than quadrupled its money on Vakrangee and chose not to exit when the stock tumbled.LIC has also increased its holding to 11 per cent in Indiabulls Housing Finance and 3.4 per cent in Dewan Housing Finance by the end of September, just before the two stocks crashed.Email queries sent to LIC seeking the investment rationale in these companies did not elicit any response.