Our articles specific to the four investment strategies we offer. Whether you invest with us or are looking to invest, these
articles can you give you an insight into why we make the decisions we make.
Investors’ decision making is often underpinned by a key psychological trait – loss aversion. As explained by Noble laureate Daniel Kahneman, the result of ‘loss aversion’ is that our pain from losses is more than twice the joy from equal amounts of gain. Juxtaposing this idea to the CCP investing approach discussed in our book […]
Investors’ decision making is often underpinned by a key psychological trait – loss aversion. As explained by Noble laureate Daniel Kahneman, the result of ‘loss aversion’ is that our pain from losses is more than twice the joy from equal amounts of gain. Juxtaposing this idea to the CCP investing approach discussed in our book […]
It is rare to find an Indian pharma company which makes systematic investments towards building the customer’s trust, improving compliance and ramping up manufacturing efficiency. Divis Labs is one such company that has delivered on these fronts for almost three decades. It has been the preferred manufacturing partner for major Western pharma companies on the […]
A review of the last four years of CCP returns highlights the consistency of performance across investee companies – almost all constituent stocks have compounded their share prices at 15-30% annually demonstrating that stock selection contributed significantly to portfolio returns. Additionally, portfolio management tools such as the Longevity Framework and Margin of Safety & Sustainability […]
Several CCP Portfolio companies have announced business initiatives which seek to change the paradigm of certain industries – such as Titan (Caratlane), Asian Paints (Home Décor and backward integration) and Bajaj Finance (Fintech related initiatives). All of these initiatives are already profitable with a potential to leverage the existing core strengths of these companies to […]
Investors who’ve studied Warren Buffett and Peter Lynch know that so-called “boring” stocks can turn out to be great investments in the long run. In India, a few lenders have been able to perform consistently across cycles. However, this also makes them prey to cycles where share prices don’t tend to follow fundamentals as investors […]
Investors who’ve studied Warren Buffett and Peter Lynch know that so-called “boring” stocks can turn out to be great investments in the long run. In India, a few lenders have been able to perform consistently across cycles. However, this also makes them prey to cycles where share prices don’t tend to follow fundamentals as investors […]
When the economic climate is benign, the share prices of financial services companies do not adequately capture the risks of aggressive lending and governance practices. The true intrinsic value of such companies becomes apparent only when such risk actually play out. History shows that when the risk plays out, the market cap of such companies […]
Financial services companies in general and Indian NBFCs in specific tend to encounter a crisis every few years. High-quality management teams not only deal with such crises but actually benefit from it. NBFCs in India have seen three challenging events in the last six years – demonetization, the failure of a large NBFC (leading to […]
The fact that Indian lenders are sitting on: (i) their highest ever capital adequacy, (ii) their lowest non performing assets since the Asset Quality Review in 2015, and (iii) their highest RoAs since FY13 has been masked by global macro uncertainties. Since private sector Indian banks are funded by growing domestic financial savings and have […]
This month we place the spotlight on Vijaya Diagnostic Centre Limited (Vijaya), a leading diagnostic player in Andhra Pradesh and Telangana, and one of the few organised players to offer an integrated offering of pathology (2/3rd revenue contribution) and radiology (1/3rd share of revenues). Vijaya has consistently outperformed its integrated diagnostic peers (FY18-22 average EBITDA margin nearly […]
This month we place the spotlight on Vijaya Diagnostic Centre Limited (Vijaya), a leading diagnostic player in Andhra Pradesh and Telangana, and one of the few organised players to offer an integrated offering of pathology (2/3rd revenue contribution) and radiology (1/3rd share of revenues). Vijaya has consistently outperformed its integrated diagnostic peers (FY18-22 average EBITDA margin nearly […]
In 2QFY23, Little Champs Portfolio (LCP) witnessed median revenue growth of 24% and PBT growth of 14%. However, some portfolio companies did face headwinds around revenues (Covid-19 related revenues tapering off, impact from price hikes) and margins (raw material and energy costs up). However, these headwinds have been abating in recent months which should aid […]
Globalisation has been an important growth driver for Little Champs. However, several headwinds (geopolitical issues, rising energy costs and rising interest rates) in some export markets like Europe have raised concerns around Little Champs with significant global exposure. The fact that historically the impact of crises in the West has had limited impact on Indian […]
Given Little Champs’ philosophy of investing in smallcaps which are market leading franchises, the portfolio has a preponderance of niche B2B names. Conventional arguments against B2B companies centre around their weak bargaining power vs much larger customers & suppliers and lack of entry barriers around brands & distribution. However, unlike a typical B2B company, the […]
Most of us have used a checklist at some point. Humans need checklists because most of us have imperfect recall. Checklists provide a cognitive safety net. They prevent us from having to suffer due to our flaws —flaws of memory, attention, and thoroughness. Checklists have been found to be effective in performing complex tasks in varied […]
Most of us have used a checklist at some point. Humans need checklists because most of us have imperfect recall. Checklists provide a cognitive safety net. They prevent us from having to suffer due to our flaws —flaws of memory, attention, and thoroughness. Checklists have been found to be effective in performing complex tasks in varied […]
The operational efficiency of the quantitative approach we take in MeritorQ allows us to analyze and rank stocks over a large investment universe on a consistent set of metrics. Ranking over a large peer group of companies magnifiesthe power of statistical analysis and hence the reliability of the screening and selection steps. Another benefit of […]
Just as the Moneyball approach in baseball (as explained by Michael Lewis in his book by the same name) helped a team of seemingly average players consistently win matches, in Marcellus’ MeritorQ, we select good quality and undervalued companies (rather than betting on singular ‘quality’ or ‘value’ investment opportunities) to deliver superior risk-adjusted returns. The […]
The long-term valuation of a company is determined by the growth and longevity of its free cash flows (FCF). Its share price, on the other hand, is heavily influenced by near term earnings/events. This creates a disconnect between the intrinsic value of the company and its share price. This disconnect has been stark for the […]
The long-term valuation of a company is determined by the growth and longevity of its free cash flows (FCF). Its share price, on the other hand, is heavily influenced by near term earnings/events. This creates a disconnect between the intrinsic value of the company and its share price. This disconnect has been stark for the […]
For the four quarters ending 2QFY23, the Rising Giants portfolio witnessed median revenue growth of 23% and EBITDA growth of 14%. Some portfolio companies faced headwinds around Covid-19 related revenues tapering off and higher input prices. However, as is the norm in stockmarkets, the -16.44% price correction in the portfolio (since inception) is extrapolating these […]
Brinton Johns & Brad Slingerlend’s 2014 paper, ‘Complexity Investing’, discusses how it’sfutile to forecast extreme event like pandemics, stockmarket crashes and tech disruptions. These events belong to complex ecosystems with unpredictable outcomes and a tendency towards polarization i.e. a few winners prevail – those who constantly adapt, keep building on their strengths and thus end […]
Rising Giants have been at the forefront of implementing tech solutions to sustain their competitive advantages, drive efficiencies (around cost, working capital and asset utilisation) and build scalable organisations (transitioning from single to multi-product & multi-geography companies). At the same time, the relatively low-cost but high impact nature (low marginal cost & ability to scale […]
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This month we place the spotlight on Ultramarine & Pigments Limited (UMP), a top 3 global manufacturer of inorganic Ultramarine Blue pigment (and the leader in India and Asia-Pacific) and amongst the top manufacturer of anionic surfactants in India. Ultramarine’s pigment business enjoys significant manufacturing complexities around yield, purity and consistency particularly for industrial grade […]
While the ILFS crisis highlighted the risks associated with India’s shadow lenders, there are a few NBFCs which have not only been able to effectively compete against banks but have also been able to generate superior ROE and earnings growth. The three NBFCs in the Kings of Capital portfolio – Bajaj Finance, Aavas Financiers and […]
There are four key drivers of free cashflow in a business – revenue growth, profit margins, working capital efficiency, and asset turnover. The order of importance across these four drivers differs across businesses. As Marcellus’ CCP companies invest in technology to improve operational efficiencies, those companies that sell day-to-day essentials to their customers whilst avoiding […]
Some of our best reads you shouldn’t miss on Marcellus
HANDPICKED ARTICLES FOR OUR ACTIVE INVESTORS
High volatility in an equity portfolio creates zones of ‘excitement’ and ‘fear’ based on recent performance. This adversely affects the quality of decision making by equity investors. As a result, historically, investor returns in Indian equity funds have been lower than fund returns across different periods. Similarly, a recent example from the US – NYSE […]
The rate at which fundamentals of a company compound (and hence its share price) over the long term is inversely correlated with the quantum of benefit that an investor can achieve by perfectly timing her purchases at the bottom of the share price trajectory. Moreover, for a portfolio consisting of high-quality companies, benefits from a […]
Value addition from every initiative undertaken by a company follows an ‘S-curve’ with three parts to it – the investment phase, the growth phase and the fade period. The fundamentals of the overall company are a consolidation of ‘S-curves’ of all initiatives. There are several limiting factors to every initiative such as addressable market size, […]
There are four key drivers of free cashflow in a business – revenue growth, profit margins, working capital efficiency, and asset turnover. The order of importance across these four drivers differs across businesses. As Marcellus’ CCP companies invest in technology to improve operational efficiencies, those companies that sell day-to-day essentials to their customers whilst avoiding […]
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