Investment Philosophy
An alternative recipe for investing in India
comes from California
Where our inspiration came from
Rob Kirby, in a note written in 1984 (in the Journal of Portfolio Management), narrated an incident
involving his client’s husband. The gentleman had purchased stocks recommended by Kirby in denominations of US$5000 each but, unlike Kirby, did not sell anything from the portfolio.
This process (of buying when Kirby bought but not selling thereafter) led to enormous wealth creation over a period of about ten years. The wealth creation was mainly on account of one position transforming to a holding worth nearly $1m in Xerox. Impressed the power of this approach – of buying great companies and then letting them for ten years – Kirby coined the term “Coffee Can Portfolio”.
Power Law: 2 firms generate exponential returns at the end of 10 years
Source: Peter Thiel’s ‘Zero to One’
Three C’s of Marcellus’ Investing Philosophy
At Marcellus, our Purpose is to make wealth creation simple and accessible by being trustworthy & transparent capital allocators. At Marcellus has evolved from the ideas of Kirby and Thiel, which we have refined further. Our investing approach has 3 pillars:
Clean Accounts
Our quantitative frameworks which use a combination of forensic accounting and capital allocation assessment define our investible universe.
Capital Allocation
We look for companies with superior track record of capital allocation. We love companies that generate free cash flows and reinvest them in the business to fuel further growth.
Competitive Advantage
Our experienced investment team through in-depth primary research constructs a portfolio of companies with deep competitive moats.
