Our goal is to help people, families, and organizations create wealth. We do that by following these principles:
Compounding works like magic in the long-term and it can turn a small investment amount into a large sum over a long period of time. Never interrupt compounding unnecessarily.
We focus on identifying companies which will generate returns over the long-term. LONGER the time horizon, the greater is the possibility to create MORE wealth.
and not a piece of paper which trades in the stock market. When we invest into a Company, we are buying claims on the future cash flows of businesses which will drive its value.
which helps them create incremental value for their shareholders. We focus on investing in such businesses, in attractive industries run by professional and ambitious management.
but striving to continuously increase that circle. We only invest money in businesses and industries that we understand thoroughly or are within our circle of competence. Even though we make an effort to increase our circle-of-competence every day, if we do not have adequate knowledge about an investment opportunity facing us, we do not invest in such businesses. Return of Capital is always more important than Return on Capital.
Inculcating Margin Of Safety in our investment process allows us to minimize the risks that we undertake while selecting stocks. Downside protection is more important that upside participation. To reiterate, Return of Capital is always more important than Return on Capital.
How do we do it?
We have institutionalized an extensive 9-step investment process with two primary building blocks – Fundamental Approach and Scuttlebutt Approach
- Stock Universe Segregation: Segregate the stock universe into different industry groups based on their businesses.
- Run Screeners: Run screeners based on various performance indicators to identify Companies within particular industry groups which are underpriced.
- Best Company Identification: Select company within the industry with strong competitive moats and good growth potential.
- Annual Reports Analysis: Dive into the jungle of annual reports and financial news/journals/management interviews/industry reports of the selected company to deeply understand the business and analyze the financial statements to evaluate the soundness of the business and management.
- Competitive Analysis: Read annual reports of the competitors to better understand the industry;. Compare and analyze the business fundamentals and financial performance of the Company versus its competitors.
- Due-Diligence: Interact with various stakeholders of the Company including but not limited to customers, suppliers, dealers, contractors, competitors, and management to get their perspective of current and future prospects.
- Report Generation: Based on the investment process, we generate comprehensive Investment Reports during various stages of investing. These reports are used by the Investment Management team for investment or to make recommendations to clients.
- Portfolio Construction: Construct a portfolio to reduce risks and maximize investment returns.
- Portfolio Monitoring: Continuously monitor and gather more information about the Company from Quarterly Reports and Annual General Meetings. Evaluate valuation levels of the company and sector in the prior periods to understand whether current prices are attractive.
- Compounders, which will grow at a steady pace and create wealth over the long term
- Fast growers, which will grow at stellar rates in the foreseeable future due to strong management team and untapped opportunity in the industry
- Arbitrage opportunity, which arise(s) because of short term mispricing
- Turnaround opportunity, which arise(s) due to unprofitable companies turning profitable
- Diversifiers, which will continue do well despite economic downturn