Strategy Series

Our articles specific to the six 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.

Consistent Compounders
Rich rewards from Investing in Quality during the Toughest Phase

Long periods of outperformance by quality firms are often characterized by intermittent periods of severe underperformance – something that has been unavoidable by even the likes of Warren Buffet. Such underperformance was especially prominent during three instances (first half of 1970s, Mar’99-Aug’00 & Nov’04-Apr’06) wherein Berkshire Hathaway’s underperformance was in high double digits even as […]

MAR 08 . 9 MIN READ READ MORE
Consistent Compounders JAN 06 . 8 MIN READ
A Retailer’s Path to Consistent Compounding
Consistent Compounders OCT 08 . 13 MIN READ
High ROCE of CCP companies attracts new competitors regularly
Consistent Compounders JUL 10 . 16 MIN READ
Succession Planning is Critical for Disruptive Capital Allocation
Consistent Compounders
Rich rewards from Investing in Quality during the Toughest Phase

Long periods of outperformance by quality firms are often characterized by intermittent periods of severe underperformance – something that has been unavoidable by even the likes of Warren Buffet. Such underperformance was especially prominent during three instances (first half of 1970s, Mar’99-Aug’00 & Nov’04-Apr’06) wherein Berkshire Hathaway’s underperformance was in high double digits even as […]

Mar 08 . 9 MIN READ READ MORE
Consistent Compounders
A Retailer’s Path to Consistent Compounding

Over an extended period of time, it is hard to make money in Retailing. In this newsletter, we discuss a subset of retailing – apparel retailing – and how the principles that underpin the business models of consistent compounders in general are of relevance for success in apparel retailing as well. Two key variables – […]

Jan 06 . 8 MIN READ READ MORE
Consistent Compounders
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 […]

Oct 08 . 13 MIN READ READ MORE
Consistent Compounders
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 […]

Jul 10 . 16 MIN READ READ MORE
Global Compounders
Global Compounders Portfolio: Resilience Amidst Chaos

Marcellus’ Global Compounders Portfolio (GCP) strategically invests in 25-30 deeply moated global companies aligned with megatrends, fostering a consistent mid to high teens compounding of free cash flow/earnings. Amidst an increasingly uncertain global macro landscape, our proprietary Torque based positioning favors defensive stocks that deliver higher than GDP growth with low earnings volatility – as […]

FEB 12 . 9 MIN READ READ MORE
Global Compounders DEC 05 . 10 MIN READ
Global Compounders Portfolio: First Anniversary Review
Global Compounders OCT 24 . 11 MIN READ
Unleashing the Power of ‘Owner Operators’ to create Wealth for our Clients
Global Compounders AUG 28 . 15 MIN READ
Unlocking Wealth Creation Through External Capital Allocation – An Underappreciated Phenomenon
Global Compounders
Global Compounders Portfolio: Resilience Amidst Chaos

Marcellus’ Global Compounders Portfolio (GCP) strategically invests in 25-30 deeply moated global companies aligned with megatrends, fostering a consistent mid to high teens compounding of free cash flow/earnings. Amidst an increasingly uncertain global macro landscape, our proprietary Torque based positioning favors defensive stocks that deliver higher than GDP growth with low earnings volatility – as […]

Feb 12 . 9 MIN READ READ MORE
Global Compounders
Global Compounders Portfolio: First Anniversary Review

Marcellus’ Global Compounders Portfolio (GCP) strategically invests in 25-30 deeply moated global companies aligned with megatrends, fostering a consistent mid to high teens compounding of free cash flow/earnings. As GCP reaches its first birthday, we reflect on our journey. Despite the brief time span, it’s reassuring to witness the portfolio’s progress aligning with our expectations, […]

Dec 05 . 10 MIN READ READ MORE
Global Compounders
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 […]

Oct 24 . 11 MIN READ READ MORE
Global Compounders
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 […]

Aug 28 . 15 MIN READ READ MORE
Kings of Capital
How Will Tight System Liquidity Impact KCP?

Given consistently strong credit demand and weak deposit growth, we are now staring at a tough funding environment with banking sector credit to deposit ratio at an all-time high of ~80%. This funding environment along with consistent regulatory action will separate the men from the boys in the upcoming quarters leading to divergent growth outcomes […]

APR 08 . 8 MIN READ READ MORE
Kings of Capital DEC 09 . 8 MIN READ
Kings of Capital Portfolio Newsletter: Quality lenders to benefit from RBI’s credit shakeout
Kings of Capital SEP 07 . 11 MIN READ
Learning from history: Discounting in Financial Services is a bad strategy
Kings of Capital APR 29 . 10 MIN READ
A Simple Approach to Valuing Financial Services Companies
Kings of Capital
How Will Tight System Liquidity Impact KCP?

Given consistently strong credit demand and weak deposit growth, we are now staring at a tough funding environment with banking sector credit to deposit ratio at an all-time high of ~80%. This funding environment along with consistent regulatory action will separate the men from the boys in the upcoming quarters leading to divergent growth outcomes […]

Apr 08 . 8 MIN READ READ MORE
Kings of Capital
Kings of Capital Portfolio Newsletter: Quality lenders to benefit from RBI’s credit shakeout

To curb systemic risk posed by the sharp growth in unsecured credit and NBFC credit in the banking system, the RBI raised risk weights on both from 100% to 125%, effectively asking lenders to set aside more equity capital for these credit risks. This move is likely to have highest impact on business models of […]

Dec 09 . 8 MIN READ READ MORE
Kings of Capital
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 […]

Sep 07 . 11 MIN READ READ MORE
Kings of Capital
A Simple Approach to Valuing Financial Services Companies

Valuing lenders and insurance companies is tricky as the well accepted principle of discounting future cash flows does not work for Financial Services companies. These companies work under a regulatory framework which requires them to maintain a minimum capitalization level and also reinvest a large part of their earnings. Technically these firms have no/negative free […]

Apr 29 . 10 MIN READ READ MORE
Little Champs
Spotlighting Rainbow Children’s Medicare

In this month’s Little Champs newsletter, we delve deeper into Rainbow Children’s Medicare (Rainbow), one of the new additions to the portfolio. Rainbow, founded in Hyderabad in 1999 by Dr Ramesh Kancharla, focusses only on pediatric and maternity care. The Company stands head & shoulders above its like-to-like peers on profitability and growth metrics and […]

FEB 27 . 10 MIN READ READ MORE
Little Champs NOV 10 . 11 MIN READ
Reinvesting Profits Back into the Business
Little Champs AUG 07 . 10 MIN READ
Invest in Dominant B2B Firms in Highly Profitable Industries
Little Champs MAR 21 . 8 MIN READ
Rapidly Rising Profits Alongside Falling Share Prices
Little Champs
Spotlighting Rainbow Children’s Medicare

In this month’s Little Champs newsletter, we delve deeper into Rainbow Children’s Medicare (Rainbow), one of the new additions to the portfolio. Rainbow, founded in Hyderabad in 1999 by Dr Ramesh Kancharla, focusses only on pediatric and maternity care. The Company stands head & shoulders above its like-to-like peers on profitability and growth metrics and […]

Feb 27 . 10 MIN READ READ MORE
Little Champs
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 […]

Nov 10 . 11 MIN READ READ MORE
Little Champs
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 […]

Aug 07 . 10 MIN READ READ MORE
Little Champs
Rapidly Rising Profits Alongside Falling Share Prices

Over the last decade, while the BSE Small Cap index constituents have grown operating profits in low teens, the Little Champs constituents have consistently delivered 20%+ EBITDA growth. This has resulted in superior, consistent long term returns alongside sharper recoveries post drawdowns than the BSE SmallCap index. In recent quarters, while the fundamentals for Little […]

Mar 21 . 8 MIN READ READ MORE
Marcellus Erudite
Marcellus Portfolio performance and update on fundamentals

*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) During FY24 (12 months ending 31st March 2024), Marcellus’ CCP Portfolio delivered 24% […]

APR 18 . 10 MIN READ READ MORE
Marcellus Erudite MAR 21 . 7 MIN READ
Portfolio performance and update on Fundamentals
Marcellus Erudite FEB 19 . 8 MIN READ
Marcellus Portfolio Snapshot and Update on Fundamentals – January 2024
Marcellus Erudite JAN 16 . 15 MIN READ
Marcellus Portfolio Update and Performance Snapshot – December 2023
Marcellus Erudite
Marcellus Portfolio performance and update on fundamentals

*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) During FY24 (12 months ending 31st March 2024), Marcellus’ CCP Portfolio delivered 24% […]

Apr 18 . 10 MIN READ READ MORE
Marcellus Erudite
Portfolio performance and update on Fundamentals

*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) In our recent CCP newsletter (click here ) we highlighted that long periods of […]

Mar 21 . 7 MIN READ READ MORE
Marcellus Erudite
Marcellus Portfolio Snapshot and Update on Fundamentals – January 2024

  *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) For the quarter ended December 2023 (i.e. 3QFY24), earnings growth of […]

Feb 19 . 8 MIN READ READ MORE
Marcellus Erudite
Marcellus Portfolio Update and Performance Snapshot – December 2023

  Consistent Compounders Portfolio (CCP) Calendar year 2023 ended with Marcellus’ CCP portfolio generating 16% returns with 6% underperformance against Nifty50 TRI, supported by a recovery in performance from April 2023 onwards (1st Apr 2023 to 31st Dec 2023 performance was 28%, marginally better than Nifty50 TRI). The top-5 stocks in Nifty were Tata Motors, Bajaj Auto, […]

Jan 16 . 15 MIN READ READ MORE
MeritorQ Advisory
MeritorQ: Profiting from the Dislocation in Indian Megacaps

Although India’s 20 most profitable listed companies (the ‘Megacaps’) account for around 50% of the profits generated by the BSE 500 companies, these Megacaps account for just 34% of the BSE500’s market cap (down from 41% a decade ago and 45% nearly two decades ago). Indian retail investors’ fascination with small caps seems to be […]

APR 19 . 6 MIN READ READ MORE
MeritorQ Advisory FEB 21 . 7 MIN READ
Rebalancing and the Value Effect
MeritorQ Advisory NOV 21 . 9 MIN READ
The Risks of Owning an Individual Stock
MeritorQ Advisory OCT 10 . 6 MIN READ
Why Fundamentals and Valuations Matter
MeritorQ Advisory
MeritorQ: Profiting from the Dislocation in Indian Megacaps

Although India’s 20 most profitable listed companies (the ‘Megacaps’) account for around 50% of the profits generated by the BSE 500 companies, these Megacaps account for just 34% of the BSE500’s market cap (down from 41% a decade ago and 45% nearly two decades ago). Indian retail investors’ fascination with small caps seems to be […]

Apr 19 . 6 MIN READ READ MORE
MeritorQ Advisory
Rebalancing and the Value Effect

In this newsletter, we quantify the contribution of rebalancing to overall returns by breaking down the portfolio returns into sub-components. We find that periodic rebalancing drives most of the returns of systematic relative value strategies. Selecting quality, undervalued companies, as we do in MeritorQ’s selection step, is effective only when the portfolio is regularly rebalanced. […]

Feb 21 . 7 MIN READ READ MORE
MeritorQ Advisory
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 […]

Nov 21 . 9 MIN READ READ MORE
MeritorQ Advisory
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 […]

Oct 10 . 6 MIN READ READ MORE
MeritorQ PMS
MeritorQ: A Deeper In-Depth Look At MeritorQ’s Forensic Model

MeritorQ uses forensic ratios to evaluate the accounting quality of Indian companies. As we highlighted in our February newsletter – Forensic Accounting Using Quant Methods Boosts Returns – our accounting checks can identify accounting frauds well in advance of the actual drawdown event. Using the specific examples of two companies in this newsletter, we discuss how accounting […]

MAR 15 . 9 MIN READ READ MORE
MeritorQ PMS FEB 13 . 11 MIN READ
MeritorQ: Forensic Accounting Using Quant Methods Boosts Returns
MeritorQ PMS JAN 11 . 10 MIN READ
MeritorQ: The Power of Checklists
MeritorQ PMS DEC 08 . 8 MIN READ
MeritorQ: Strength Lies in Numbers
MeritorQ PMS
MeritorQ: A Deeper In-Depth Look At MeritorQ’s Forensic Model

MeritorQ uses forensic ratios to evaluate the accounting quality of Indian companies. As we highlighted in our February newsletter – Forensic Accounting Using Quant Methods Boosts Returns – our accounting checks can identify accounting frauds well in advance of the actual drawdown event. Using the specific examples of two companies in this newsletter, we discuss how accounting […]

Mar 15 . 9 MIN READ READ MORE
MeritorQ PMS
MeritorQ: Forensic Accounting Using Quant Methods Boosts Returns

Over the past 16 years, the average return of market cap weighted BSE 500 index has been 10.3% p.a. on a 3-year rolling basis. But the story changes completely when we differentiate between the index constituents based on their accounting quality. There is a clear deterioration in returns and a rapid increase in risk and […]

Feb 13 . 11 MIN READ READ MORE
MeritorQ PMS
MeritorQ: The Power of Checklists

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 […]

Jan 11 . 10 MIN READ READ MORE
MeritorQ PMS
MeritorQ: Strength Lies in Numbers

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 […]

Dec 08 . 8 MIN READ READ MORE
Rising Giant
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, […]

NOV 18 . 14 MIN READ READ MORE
Rising Giant AUG 07 . 10 MIN READ
Invest in Dominant B2B Firms in Highly Profitable Industries
Rising Giant APR 24 . 8 MIN READ
Outsized Earnings Growth Alongside Falling Share Prices
Rising Giant FEB 20 . 6 MIN READ
Short Term Excitement vs Long Term Wealth Creation
Rising Giant
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, […]

Nov 18 . 14 MIN READ READ MORE
Rising Giant
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 […]

Aug 07 . 10 MIN READ READ MORE
Rising Giant
Outsized Earnings Growth Alongside Falling Share Prices

In this month’s newsletter, we ask whether the Rising Giants (RG) stocks were ‘richly’ valued when we bought them? Using an earnings growth of 20% (5% for the terminal year) and cost of capital of 12%, the median longevity implied by the then prevailing market prices for the RG portfolio rose from 8 years as at FY18-end […]

Apr 24 . 8 MIN READ READ MORE
Rising Giant
Short Term Excitement vs Long Term Wealth Creation

Every year there will be a couple of sectors and a handful of stocks that give outsized returns helped by short term earnings momentum and narratives around the same. However, such sectors and stocks are generally unable to replicate their short-term success over the medium to long-term. While chasing momentum can provide short term enrichment, […]

Feb 20 . 6 MIN READ READ MORE

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Marcellus Consistent Compounder Portfolio Webinar on Amidst high input cost inflation, pricing power protects margins & market share
Amidst high input cost inflation, pricing power protects margins & market share of CCPs
Mar 10, 2022 READ MORE

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Marcellus 'Global Compounders Portfolio' Webinar
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Apr 26, 2024
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Kings of Capital Webinar: Update on latest fundamentals of the KCP portfolio companies
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Consistent Compounders
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 […]

Aug 16 . 5 MIN READ READ MORE
Consistent Compounders
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, […]

Jul 09 . 12 MIN READ READ MORE
Consistent Compounders
When ‘Loss Aversion’ Meets ‘Time Horizons’ in Equity Investing

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 […]

Feb 06 . 8 MIN READ READ MORE

FEATURED BLOGS

Outsourcing 2.0: The Global Capability Centre Boom in India
Oct 26 . 7 MIN READ READ MORE
Busting Popular Macroeconomic Myths
  • BEHAVIOUR
  • CULTURE
Feb 21 . 5 MIN READ READ MORE
Asian Paints vs Sherwin Williams: Different Paths to Dominance
  • BEHAVIOUR
  • CULTURE
Jan 25 . 10 MIN READ READ MORE

Recommended Reads

Some of our best reads you shouldn’t miss on Marcellus

MeritorQ: Profiting from the Dislocation in Indian Megacaps
Apr 19 . 6 MIN READ READ MORE
Marcellus Portfolio performance and update on fundamentals
Apr 18 . 10 MIN READ READ MORE
How Will Tight System Liquidity Impact KCP?
Apr 08 . 8 MIN READ READ MORE

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