Strategy Series
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.
Consistent Compounders
How Volatile Funds Cost Investors Dear
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 […]
Consistent Compounders
JAN 18 · 3 MIN READ
Getting Stronger With Every Covid Wave
Consistent Compounders
JAN 03 · 3 MIN READ
The Benefits of Timing are Inversely Correlated with the Quality of Fundamentals
Consistent Compounders
DEC 01 · 3 MIN READ
CCPs use more ‘S-curves’ to elongate their fundamental compounding
Consistent Compounders
Feb 01 · 3 MIN READ
How Volatile Funds Cost Investors Dear
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 […]
Feb 01 · 3 MIN READ
Consistent Compounders
Jan 18 · 3 MIN READ
Getting Stronger With Every Covid Wave
As we now have six quarters of reported financials since the pandemic began, we are getting a clearer picture of the impact of Covid induced disruptions on lenders. Despite the severe second Covid wave, the increase in GNPAs i.e. net slippages for KCP lenders such as HDFC Bank, Kotak Bank and Bajaj Finance during the […]
Jan 18 · 3 MIN READ
Consistent Compounders
Jan 03 · 3 MIN READ
The Benefits of Timing are Inversely Correlated with the Quality of Fundamentals
Performance Update of the Live Fund The key objective of our “Kings of Capital” strategy is to own a portfolio of 10 to 14 high quality financial companies (banks, NBFCs, life insurers, general insurers, asset managers, brokers) that have good corporate governance, prudent capital allocation skills and high barriers to entry. By owning these high-quality […]
Jan 03 · 3 MIN READ
Consistent Compounders
Dec 01 · 3 MIN READ
CCPs use more ‘S-curves’ to elongate their fundamental compounding
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, […]
Dec 01 · 3 MIN READ
Kings of Capital
Learning from Global Financials – Part-2: The Evolution of Financial Services
In this newsletter we discuss the evolution of the Financial Services sector in the US and UK and in that context, highlight the implications for Indian investors. Between 1990-2020, the weight of Financial Services stocks in the S&P500 index has increased from 7% to 11%. However, a closer look at the composition of Financial Services […]
Kings of Capital
NOV 17
Why are we underperforming the Bank Nifty?
Kings of Capital
OCT 18
Learning from global financials – Part-1: Progressive Corp.
Kings of Capital
SEP 20
The market is unable to efficiently discount news on Financial Services stocks
Kings of Capital
Dec 16
Learning from Global Financials – Part-2: The Evolution of Financial Services
In this newsletter we discuss the evolution of the Financial Services sector in the US and UK and in that context, highlight the implications for Indian investors. Between 1990-2020, the weight of Financial Services stocks in the S&P500 index has increased from 7% to 11%. However, a closer look at the composition of Financial Services […]
Dec 16
Kings of Capital
Nov 17
Why are we underperforming the Bank Nifty?
Since its inception about fifteen months ago, the Kings of Capital Portfolio (KCP) has delivered annualized returns of 34% vs. 54% for the Bank Nifty. The underperformance of the KCP portfolio is a factor of: (i) fund composition vs. that of the index – Bank Nifty consists of only banks vs. KCP has an allocation […]
Nov 17
Kings of Capital
Oct 18
Learning from global financials – Part-1: Progressive Corp.
As discussed in our Mar, 2021 newsletter on ICICI Lombard (click here to read), the unique business model of raising cash upfront (at possibly no cost) and earning income on it for extended periods of time makes a well-run general insurer an attractive business to own. In this newsletter we discuss Progressive Corp., an American auto insurer established […]
Oct 18
Kings of Capital
Sep 20
The market is unable to efficiently discount news on Financial Services stocks
Easy access to information and incessant news flow around the economy, politics, Covid, Government policies and RBI regulations makes it difficult for investors to “do nothing” and hold on to high quality Financial Services companies. Data suggests that the impact of positive or negative news flow is further amplified in the case of Financials – […]
Sep 20
Little Champs
How Little Champs Become Consistent Compounders
A basic takeaway of cashflow based valuation is that a longer a company generates healthy free cash flow (FCF) growth, the higher its intrinsic value. Our longevity framework helps in assessing, using objective parameters, how long a company is likely to sustain healthy growth in FCF. For younger companies like the Little Champs, after a […]
Little Champs
DEC 08
Spotlighting Galaxy Surfactants Limited
Little Champs
NOV 09
Exit the “Lala” Company, Enter the Little Champ
Little Champs
OCT 09
‘Lethargy Tests’ For Our Little Champs
Little Champs
Jan 10 · 3 MIN READ
How Little Champs Become Consistent Compounders
A basic takeaway of cashflow based valuation is that a longer a company generates healthy free cash flow (FCF) growth, the higher its intrinsic value. Our longevity framework helps in assessing, using objective parameters, how long a company is likely to sustain healthy growth in FCF. For younger companies like the Little Champs, after a […]
Jan 10 · 3 MIN READ
Little Champs
Dec 08
Spotlighting Galaxy Surfactants Limited
This month we place the spotlight on Galaxy Surfactants Limited, the world’s leading producer of oleo-chemical based surfactants. Surfactants and other speciality chemicals manufactured by Galaxy impart critical functional properties, texture, and market-positioning attributes to the end products manufactured by the FMCG giants. This together with need for high quality & safety (as these […]
Dec 08
Little Champs
Nov 09
Exit the “Lala” Company, Enter the Little Champ
The degree to which a firm institutionalizes it’s systems & processes is one of the biggest sources of differentiation between a high quality versus a mediocre franchise. Hence in Marcellus’ Longevity Framework, our research on “succession planning” focuses on softer aspects such as the institutionalization of the business, the quality of the independent Board Directors […]
Nov 09
Little Champs
Oct 09
‘Lethargy Tests’ For Our Little Champs
At Marcellus we use our proprietary Longevity Framework to rank companies on the quantitative and qualitative aspects surrounding the longevity of their free cash flows. This framework is not only used for initial stock selection but also as a tool to continuously evaluate the portfolio companies to detect any signs of lethargy (or loss of […]
Oct 09
For more content on our strategy, visit the archives
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