Marcellus Partner’s Bulletin_July

All returns are post fees & net of expenses (TWRR). The returns are as on 23rd July 2021.

Inception Date & Benchmark:

Consistent Compounders Portfolio:Inception: 1^st Dec,2018 Benchmark: Nifty 50

Little Champs Portfolio: Inception:28^th Aug,2019 Benchmark: S&P BSE Small Cap

Kings of Capital Portfolio: Inception:28^th July ,2020 Benchmark: Bank Nifty (Inception returns are absolute in nature since portfolio has not completed one year)

How longevity of a business drives its valuation:

Some of our investors and partners have a common concern pertaining to Marcellus portfolio – VALUATION. Their concern arises due to use of multiples based valuations which don’t factor in the longevity or sustainability of growth given they are based on one year’s earnings. The few who use cash flow based valuation also use a conventional DCF method which undervalues longevity of business. In the below example, we can see how a company’s valuation changes dramatically if we change the assumption of its longevity.

So, if it is longevity that drives valuation than the next important question is – how does Marcellus build conviction on the company’s business longevity?

Marcellus research team over the years have developed proprietary Longevity Framework which helps us to build our conviction on the company’s business longevity.

Our Longevity Framework not only helps us build our conviction on a company’s business longevity and hence intrinsic value of the business but also helps in determining position sizing of stocks relative to others in our portfolio (i.e., higher the score higher the allocation).

Please find below links to our latest newsletters and presentations: