our philosophy
Investing Philosophy
Our investment philosophy is guided by a mix of value investing, with a growth or turnaround focus. In most cases, our investment horizon is 3 years. We like strong and undervalued businesses and remain agnostic to the daily fluctuating stock price. Our intent is to buy the buy businesses at a discount to its intrinsic value and vice versa. We believe that market always offers pockets of opportunities in any form – a bear or a bull market. Human biases and experience play a very important role in investing. Investing is all about people. We value ideas based on single metric and are a value investor by mindset and but do not shy to take positions in out-of-flavour ideas.
Our Investments
Business Moats
We believe that stock returns over the long run will come on account of a strong competitive advantage which a business has and its ability to maintain or improve that.
Turnaround Candidates
Almost in all cases, turnaround candidates are available at a deep discount to its intrinsic value and when the cycle turns the returns are huge. Ideal time to buy a turnaround candidate is about 6-12 months prior to likely business turnaround, even as this is very difficult to predict.
Value Investing / Margin Of Safety
We like to be disciplined about having enough margin of safety while buying the stock, though we may not want to compromise on the business moat argument. We do acknowledge that at times growth will take precedence.
Investment style
While we like companies delivering sustainable ROCE, we are also opportunistic in mid-cyclicals. Cyclicals should obviously offer more adjusted returns compared to structural ideas.
Our investment style is generally long-term thematic with longer holding period. Good management quality might give lower potential upsides, but also protects us from intrinsic and peculiar risks unique to a firm. We believe that distress offers good entries to structural long-term stories in equities.
Do not believe in averages, if the theme is not playing out.
Our Strengths
Experience
Our experience is our strength. We have the ability to figure out what areas not to delve into, to understand key metrics of earnings and to know which factors are critical for valuations. By meeting innumerable management over years and by having pedigree of business families.
Understanding Market Potential
One of the key factors to fully capture the upside in any sector is to understand the potential market size. Our ability to delve into the unknown, makes us hold stocks for longer period of time to capture the entire upside in the same.
Understanding Business Cycles
We think we understand business cycles very well and how they impact the performance of cyclical stocks. We would want to use this knowledge and understanding to its fullest whenever we spot reversal of trends.
Ability To Spot Structural Changes
Our ability to spot emerging structural changes in the industry and sectors, will give us an edge in investing into stock at early part of the upcycle.
Control Over Emotional Impulse
We have, over years, mastered the art of not getting influenced by emotional impulse. In fact, our strengths lie in our ability to invest in deep value stocks, especially in not-in-favour stocks. Whenever there is an emotional sell down, it gives us opportunity to ride its upsides over a longer period of time.