Learning from history: Discounting in Financial Services is a bad strategy
History shows that competing only on the basis of price either as a lender or as an insurer has inevitably led to heavy losses and in some cases to bankruptcy. In this newsletter, we discuss how PSU general insurers in their quest to gain market share, cut pricing in group health insurance for 5+ years […]
Why MeritorQ has 30-45 stocks?
The terms ‘quantitative’, ‘systematic’, and ‘rules-based’ are often used interchangeably as representing an investment approach that is perceived to be in direct opposition to what a ‘fundamental’, ‘discretionary’ or ‘stock-picking’ approach may be. While both quantitative and discretionary strategies can pursue the same objective and both can be fundamentally oriented, quantitative strategies are different from their […]
Unlocking Wealth Creation Through External Capital Allocation – An Underappreciated Phenomenon
Marcellus’ Global Compounders Portfolio (GCP) invests in 25-30 deeply moated global companies listed mostly in developed countries and other global markets. These companies have dominant franchises which benefit from global economic megatrends and rational capital allocation by the management teams running these firms. These elements help the GCP companies drive an annual increase of approximately […]
Portfolio Performance and Update on Fundamentals July
Consistent Compounders Portfolio (CCP) Fundamentals of CCP companies have delivered healthy progress in FY23, with weighted average PAT (profits after tax) growth of 20% YoY in FY23, backed by a revenue growth of 19% YoY in FY23. 1QFY24 results reported so far have exhibited exceptional strength, representative of market share gains from competitors and […]
Invest in Dominant B2B Firms in Highly Profitable Industries
The industry in which B2B firms operate can have an outsized impact on their compounding potential. Over FY14-23, some sectors like IT, Light Industrials and Chemicals have generated twice as much RoCE and share price returns as compared to sectors like Energy and Metals & Mining (which struggle to return even cost of capital). This […]
Portfolio Performance and Update on Fundamentals – June 2023 – Marcellus
*For relative performance of particular Investment Approach to other Portfolio Managers within the selected strategy, please refer https://www.apmiindia.org/apmi/WSIAConsolidateReport.htm?action=showReportMenu Under PMS Provider Name please select Marcellus Investment Managers Private Limited and select your Investment Approach Name for viewing the stated disclosure Consistent Compounders Portfolio (CCP) Fundamentals of CCP companies continue to deliver healthy progress, as reflected in […]
Rebalancing is Often Misunderstood Yet Necessary
Periodic rebalancing or re-alignment of the MeritorQ portfolio is as necessary as watering a plant periodically to help it grow – do it too often and the plant may rot; on the other hand, never do it and the plant dies. In MeritorQ we identify quality yet relatively undervalued companies (our newsletters Forensic Accounting Using Quant […]
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 […]
Modern Utilities Operating on a Global Scale Make for Lucrative Investments.
Marcellus’ Global Compounders Portfolio (GCP) focuses on investing in 25-30 highly fortified global companies listed mostly in developed markets. These companies align with global megatrends and possess robust moats built around process capability, research and development, and capital allocation. These factors play a pivotal role in driving the consistent compounding for GCP companies. Over time, […]
MeritorQ: The Value of Free Cash Flows
In MeritorQ value is measured by comparing the free cash flow generation ability of a company versus its share price, a valuation measure known as P/FCF. We show that in India P/FCF is superior to other commonly used relative valuation measures like P/E, EV/EBITDA, and P/B. In fact, a free cash flow-based measure of relative value […]
The Consumerization of Credit in India
In the last couple of years, India’s financial services sector has crossed a significant milestone – for the first time the size of retail credit (i.e. credit extended to consumers) is now larger than corporate credit. In this newsletter, we discuss reasons behind the success of high-quality lenders (like HDFC Bank, Chola Investment & Finance […]
Making Money from Luxury Goods Manufacturers
Marcellus’ Global Compounders Portfolio (GCP) invests in 25-30 deeply moated global companies which are listed in developed countries. The nature of the products and services – which cater to global economic megatrends – and the moats developed around process capacity, R&D, and capital allocation, are the key factors that contribute to the consistency of free […]
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