Marcellus Consistent Compounders | Marcellus Newsletter

Strategy Series

Our articles specific to the six investment strategies we offer. Whether you invest with us or are looking to invest, these
articles can you give you an insight into why we make the decisions we make.

Consistent Compounders

Rich rewards from Investing in Quality during the Toughest Phase

Long periods of outperformance by quality firms are often characterized by intermittent periods of severe underperformance – something that has been unavoidable by even the likes of Warren Buffet. Such underperformance was especially prominent during three instances (first half of 1970s, Mar’99-Aug’00 & Nov’04-Apr’06) wherein Berkshire Hathaway’s underperformance was in high double digits even as […]

Consistent Compounders JAN 06 . 8 MIN READ

A Retailer’s Path to Consistent Compounding

Consistent Compounders OCT 08 . 13 MIN READ

High ROCE of CCP companies attracts new competitors regularly

Consistent Compounders JUL 10 . 16 MIN READ

Succession Planning is Critical for Disruptive Capital Allocation

Consistent Compounders

Rich rewards from Investing in Quality during the Toughest Phase

Mar 08 . 9 MIN READ READ MORE

Consistent Compounders

A Retailer’s Path to Consistent Compounding

Over an extended period of time, it is hard to make money in Retailing. In this newsletter, we discuss a subset of retailing – apparel retailing – and how the principles that underpin the business models of consistent compounders in general are of relevance for success in apparel retailing as well. Two key variables – […]

Jan 06 . 8 MIN READ READ MORE

Consistent Compounders

High ROCE of CCP companies attracts new competitors regularly

In any vibrant, free market economy, firms that enjoy high RoCE will attract continuous waves of competition. Amidst high competitive intensity, while most firms will fall by the wayside, the Consistent Compounders are able to maintain their dominance due to their strong moats – built through prudent capital allocation and strategic decision making. Marcellus’ research […]

Oct 08 . 13 MIN READ READ MORE

Consistent Compounders

Succession Planning is Critical for Disruptive Capital Allocation

Large businesses often face the risk of stagnating growth due to saturation of their core market or disruption from new innovators. One way to mitigate this risk is to invest in disruption, innovation & expansion of the business into adjacencies. However, successful execution of such capital allocation decisions is not dependent only on strategic decision-making […]

Jul 10 . 16 MIN READ READ MORE

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Curated Collection

HANDPICKED ARTICLES FOR OUR ACTIVE INVESTORS

Consistent Compounders

How Volatile Funds Cost Investors Dear

High volatility in an equity portfolio creates zones of ‘excitement’ and ‘fear’ based on recent performance. This adversely affects the quality of decision making by equity investors. As a result, historically, investor returns in Indian equity funds have been lower than fund returns across different periods. Similarly, a recent example from the US – NYSE […]

Feb 01 . 6 MIN READ READ MORE

Consistent Compounders

The Benefits of Timing are Inversely Correlated with the Quality of Fundamentals

The rate at which fundamentals of a company compound (and hence its share price) over the long term is inversely correlated with the quantum of benefit that an investor can achieve by perfectly timing her purchases at the bottom of the share price trajectory. Moreover, for a portfolio consisting of high-quality companies, benefits from a […]

Jan 03 . 8 MIN READ READ MORE

Consistent Compounders

CCPs use more ‘S-curves’ to elongate their fundamental compounding

Value addition from every initiative undertaken by a company follows an ‘S-curve’ with three parts to it – the investment phase, the growth phase and the fade period. The fundamentals of the overall company are a consolidation of ‘S-curves’ of all initiatives. There are several limiting factors to every initiative such as addressable market size, […]

Dec 01 . 8 MIN READ READ MORE

Consistent Compounders

The Path to Consistent Compounding is Paved with Free Cashflow

There are four key drivers of free cashflow in a business – revenue growth, profit margins, working capital efficiency, and asset turnover. The order of importance across these four drivers differs across businesses. As Marcellus’ CCP companies invest in technology to improve operational efficiencies, those companies that sell day-to-day essentials to their customers whilst avoiding […]

Nov 02 . 17 MIN READ READ MORE

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Consistent Compounders

How Volatile Funds Cost Investors Dear

The Benefits of Timing are Inversely Correlated with the Quality of Fundamentals

Strategy Series

Rich rewards from Investing in Quality during the Toughest Phase

A Retailer’s Path to Consistent Compounding

High ROCE of CCP companies attracts new competitors regularly

Succession Planning is Critical for Disruptive Capital Allocation

Rich rewards from Investing in Quality during the Toughest Phase

A Retailer’s Path to Consistent Compounding

High ROCE of CCP companies attracts new competitors regularly

Succession Planning is Critical for Disruptive Capital Allocation

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