HOW OUR WHEELS TURN
The well-structured and highly transparent investment process that we strongly believe is the key to successful investments.
Our investment philosophy takes root in the belief that fundamental research as an investment process yields returns and hence we lay emphasis on company specific research. The underlying principles that help us formulate the investment process: Investments are made in ‘businesses‘? and not ‘companies‘?; the latter is just an avenue. Companies (within that business) that can generate returns on capital in excess of their cost of capital over a business cycle are preferred. Earnings growth of a company is the prime driver and over a period of time the stock price of the company shall be a slave of the same. Hence, investments in stocks are to be made at reasonable valuations. Own companies that can generate long-term, sustainable earnings, managed by qualified professionals capable of executing a well conceived strategic plan.
Identification of any changes in the trends of an economy / a business (top down) and identification of a company (bottom up), within that business, is an outcome of extensive research. In our growth strategy, we seek to own companies that have prospects of above average growth and competitive advantages that will allow them to earn superior rates of return on capital. In our value strategy, we believe that the market overreacts, pricing many value stocks too low relative to their intrinsic value, and over time, reversion to the mean can generate better returns in value stocks.
Our research database with inputs from across the globe supplemented by information in public domain forms a resource to carry out research. Subsequent interactions with the top management of different companies within a business would be used to formulate/ corroborate our view on the business dynamics. This exhaustive process throws up stocks that fit our GARP philosophy. The different stocks that would find way into a portfolio shall be guided by the objectives of the portfolio.