Consistent Compounders

Why are we underperforming the Nifty?

In FY19, our portfolio companies reported 18% revenue growth, 16% earnings growth and 37% ROCE. Whilst this was a healthy performance at an overall level, the external environment facing our companies deteriorated towards the end of FY19 due to tight credit conditions accentuated by the challenges in the NBFC sector (and hence challenges faced by […]

Jun 01 . 6 MIN READ
Consistent Compounders

Risk-reward arbitrage of investing in quality

The holy grail of investing in stock markets is to buy companies which can sustain a healthy ROCE with growing capital employed, thereby delivering consistent earnings growth over long time periods. In this newsletter, we divide the Nifty50’s constituents into three buckets – A (no moats), B (shallow moats), and C (deep moats) based on […]

May 01 . 7 MIN READ
Consistent Compounders

‘Doing nothing’ is perhaps the most difficult thing to do

Buying the Consistent Compounders and holding them for long time periods becomes a difficult exercise asinvestors are bombarded with newsflow and the apprehensions which come with newsflow. As a result,investors tend to do injustice to the size of their allocation to the Consistent Compounders and the length of the holding period of this portfolio. The solution […]

Apr 01 . 9 MIN READ
Consistent Compounders

Quantifying the futility of timing the market

Many investors try to time their investments basis the perceived impact of external events on either thebroader stock market or on the share prices of specific firms. Analysing the last 30 years of stock marketdata suggests that even if an investor were to perfectly time her investments in indices / good companieseach year, her returns […]

Mar 01 . 6 MIN READ
Consistent Compounders

Why India is Blessed with Consistent Compounders?

Marcellus’ Consistent Compounders Philosophy identifies firms with high pricing power that helps sustain a wide gap between returns on capital employed and cost of equity. The portfolio holds such firms for 8-10 years on average and aims to deliver healthy returns with volatility like that of a government bond. We also made the first churn […]

Feb 01 . 6 MIN READ

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