The Risks of Owning an Individual Stock
The majority of the listed companies in India fail to beat the market cap weighted index. In this newsletter, we discuss why the odds are stacked against an individual investor owning a small set of stocks. Over a longer investment horizon, returns of benchmark indices as well as the net wealth created in stock markets […]
Stress Test for Rising Giants
Marcellus’ Rising Giants portfolio (RGP) aims to discover companies with a high probability of entry into benchmark Nifty50 index over the next 3-5 years thus capturing the outsized returns that typically accrue to potential Nifty50 entrants. Over the past year, some of the RGP stocks have faced temporary headwinds mainly on account of Covid-19 demand normalization, […]
Portfolio Performance and Update on Fundamentals – Oct 2023 – Marcellus
Consistent Compounders Portfolio (CCP) Our portfolio companies’ reported fundamentals in 2QFY24 continue to demonstrate strength and consistency – portfolio’s revenue growth was 22% YoY and EPS growth was 28% YoY in the quarter ending 30th September 2023. Several of our portfolio companies reported revenue growth rates, significantly healthier than other players in the same industry. For instance, […]
Reinvesting Profits Back into the Business
Marcellus’ Little Champs portfolio (LCP) aims to discover companies with a high probability of entry into benchmark BSE500 index over the next 3-5 years thus capturing the outsized returns that accrue to such potential entrants. Over the past year, some of the LCP stocks have faced temporary headwinds mainly on account of Covid-19 demand normalization, inventory […]
Unleashing the Power of ‘Owner Operators’ to create Wealth for our Clients
Marcellus’ Global Compounders Portfolio (GCP) strategically invests in 25-30 deeply moated global companies listed in developed countries, leveraging their products and services aligned with global economic megatrends, fortified by exceptionally solid moats. These elements contribute to the consistent compounding of free cash flow/earnings in the mid-to-high teens. Here, we spotlight the investment philosophy known as […]
Portfolio Performance and Update on Fundamentals September
Consistent Compounders Portfolio (CCP) Despite volatility in the external economic and geo-political environment, Marcellus’ CCP companies have historically delivered consistency of revenue growth and profit growth. We expect this consistency to sustain in the foreseeable future as well. Additionally, over the last few months, we have seen a rise in competitive intensity through new entrants […]
Why Fundamentals and Valuations Matter
MeritorQ’s strategy of picking high-quality undervalued companies delivers better risk adjusted returns by taking advantage of mispricing associated with erroneous investor expectation. Such a strategy also delivers positive excess returns (i.e., returns in excess of the benchmark, in this case the BSE 500) around earnings dates further reaffirming the mispricing hypothesis. In fact, a significant […]
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 […]
Portfolio Performance and Update on Fundamentals August
Consistent Compounders Portfolio (CCP) Marcellus’ Consistent Compounders Portfolio companies reported, on a weighted average basis, 20% YoY growth in profit after tax for both 1QFY24 (over 1QFY23) as well as for FY23 (over FY22). Financials sector companies in CCP (three lenders and 2 insurance companies) reported healthy topline as well as bottomline growth, reflective of […]
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 […]
For more content on our strategy, visit the archives GO TO ARCHIVES