Investment Philosophy

MULTIBAGGER APPROACH
PORTFOLIO CONSTRUCTION
COMPANY ATTRIBUTES

Multi-bagger Approach

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GROWTH

The company has to be a growth company with above Average growth potential for The next 3-5 years . Markets reward a higher PE multiple for growth companies

CONTRARIAN

Contrarian approach does not mean doing the opposite of others, it means doing things differently. Buying in popular names will not give Multi-bagger returns Contrarian

VALUE

The valuation has to be reasonable and potential for re-rating . A combination of EPS growth and PE re-rating leads to Multi-bagger returns

Portfolio Construction

INDUSTRY PROSPECTS

We invest in quality companies with a focus on small and mid-cap growth companies

QUALITY COMPANIES

Most market participants focus on price; we focus on company fundamentals

CONCENTRATED HOLDINGS

We aim to construct a portfolio of 15-20 stocks across various sectors

LONG-TERM OUTLOOK

Invest with a 3-5 year horizon with how to focus on low churn rate.

CATALYST

Value can remain value for long time. We actively look for catalysts which will lead to stock rerating.

Company Attributes

INDUSTRY LEADERS

Most of the companies in our portfolio are industry leaders with a strong sustainable competitive advantage

LOW DEBT

Companies need to have very low debt levels and some of the companies are in fact net cash positive

MANAGEMENT

Good dividend paying record, corporate governance practices & sound long term performance record.

VALUATIONS

On a trailing basis the portfolio PE ratio is less than 12x cyclically adjusted earnings.

CREEPING ACQUISITION

Majority of our companies have done buy-back / creeping acquisition in the 12 months prior to our initial acquisition

CASH FLOW

Our portfolio includes companies with strong and consistent cash flow generation

PROCESS Flow

SCREENERS


- Sales growth,

- PAT growth

- capacity utilisation

- Valuation dislocation

- EV/Sales, PE ratio

- EV/EBITDA

- Debt

- Dividend track record

- Promoter ownership

- Insider Buying

- Industry Leadership

- Credit rating

- Long term track record

RESEARCH


- Annual report

- Quarterly results

- Industry & company news

- Management interviews

- Third party research

- Management meetings

- Press releases

- Conference calls/ Analyst meets




PORTFOLIO CONSTRUCTION

- 15-20 stocks

- Balance across sectors

- Catalyst for stock re-rating

RISK

  • Risk is not a number, it is a concept or a notion. Risk equates to what Ben Graham called a "permanent loss of capital".
  • Modern finance measures risk on metrics like standard deviation, BETA, VAR etc. which we do not subscribe to.
  • We measure risk on 3 parameters
VALUATION RISK

Risk of buying stocks dear without adequate margin of safety . Reasonable valuation is the cornerstone of all our investment decisions.

EARNING RISK

Risk that current earnings could decline due to technological changes , economic changes or deterioration in management

BALANCE SHEET RISK

Risk of an over-leveraged balance sheet is due to ignorance of weak balance sheet during good times in favour of the cyclically high & un-sustainable earnings.