OVERVIEW

The Best of 2020

2020 has been such a remarkable year that it is now considered cliched to use the word ‘unprecedented’ to describe it. All of us have had different ways of dealing with increased stress levels from concerns about the safety of our loved ones, coping with working from home and from managing kids cooped up indoors for months. For us at Marcellus, two things helped us ‘normalise’ 2020 (to the extent it was possible to live a normal life in this turbulent year). The first thing that has kept us going through the year has been the faith reposed in us by over 4,000 families across India who are investors in funds managed or advised by Marcellus. We are humbled and owe a debt of gratitude to them for trusting us with their hard-earned wealth through a highly volatile year for equities. The second thing has been not letting up on our habit of writing on a regular basis. Writing has helped us think through diverse ideas, structure them as much as possible and communicate them to our readers as effectively as we could. The ~23,000 subscribers to our newsletters, blogs and curated articles have been the other pillar of strength for us. To them also we say a big thank you!

To mark the completion of the year, we have compiled a list of the best of our blogs written in the last 12 months. From the 25 blogs we published during the year, these 5 have had the highest readership, the most reader responses, high traction on social media (a new measure we track now!) and the ones whose relevance has only increased with time. We would also love to hear from you on what your favourite reads from the Marcellus stable have been. Do write back with your feedback.

From the Marcellus family, here’s wishing all our investors and readers a very healthy and happy new year. Hope 2021 brings you everything you wish for.

The Best Blogs from 2020

The Foundations of India’s economic recovery are in place (March 2020)
In this piece, written a couple of days before India went into a lockdown, we analysed 40 years of data to show that four times in the last forty years, a US recession, alongside falling US bond yields and falling oil prices has been followed by a strong economic recovery in India. In fact, India has NEVER witnessed an economic recovery without a US recession preceding it! Now, all three conditions for an Indian economic recovery – a US recession, smashed crude prices and falling US Government bond yields are – in place. Our portfolios – CCP and LCP – are ideally designed to capitalise on such an economic recovery. Nine months since publishing the blog, the thesis has only strengthened.

Behold The Leviathan: The Remaking of Indian Capitalism (May 2020)
The rise of India’s networked economy (highways, cheap flights, broadband, GST) has allowed large, efficient firms to use superior technology & better access to capital to squash smaller competitors. The result? The 20 most profitable firms in India now generate 70% of the country’s profits, up from 14% thirty years ago. In line with what is being seen in the US, the growing dominance of a handful of very large companies in India is changing the template of capitalism in India. This has very significant implications for how portfolios are constructed and how valuation techniques are used in India. The analysis in this blog made it to an article in The Economist, making it extra special for us.

India’s Kings of Capital – Part I: Uday Kotak (March 2020)
In the first of our series on India’s ‘Kings of Capital’, we profiled the ‘world’s wealthiest banker’ Uday Kotak. Possessing a high level of integrity and prudent capital allocation skills, Uday Kotak has built Kotak Bank from scratch, starting out as a small non-banking finance company in 1985 to one of India’s leading private sector financial services franchises, including ventures in insurance, asset management and broking.

India’s Kings of Capital – Part II: Deepak Parekh (May 2020)
Any book on the history of India’s financial services sector will need a dedicated chapter to Deepak Parekh. Under his leadership, the HDFC group has become India’s most successful financial services conglomerate by dominating virtually every segment that it has ventured into since its inception in 1977. The two key aspects we believe Deepak Parekh has mastered are (i) allocating financial capital; and (ii) allocating human capital.

How Investors Are Trapped By The Prisoner’s Dilemma (August 2020)
“Invest in good companies and remain invested for the long term” is a common investing advice, including from legends like Warren Buffett. Most investors, however, miss on following one or both parts of this adage. Even if they find good companies to invest in, they do not hold it for the long term. Why does this happen? The answer lies in classical game theory. In this piece, we explore the ‘Investors dilemma’ a variant of the Prisoner’s Dilemma.

Disclosure:Kotak Mahindra Bank, HDFC Bank, HDFC Life Insurance and HDFC AMC are part of portfolios managed or advised by Marcellus.

Regards,
Team Marcellus

 

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