The following form the pillars of our investment thinking;
- Investment, Not Speculation – We try to make our clients the investors in the value and growth of the businesses rather than the speculators in the prices of the shares/ stocks. We ourselves follow the same philosophy in our investments.
- Specialization Based on Circle of Competence – We believe that our competence lies in equity investing, and so we focus on that. This aligns perfectly with our philosophy of investing for the long term as, in the long run, returns inequity outranks returns from any other asset class by a wide margin. We are not a verse to investing in other alternative asset classes, but only as satellite additions to the portfolio based on specific client needs.
- Above Average Returns, Below Average Risk – Our goal is to research businesses which compound capital at the above average rate while incurring a below average level of risk. These businesses have more growth, higher returns on capital, stronger balance sheets and frequently lower valuations than the markets. They may be volatile in the short run (as most of the things are) but in long run volatility is not a risk.
- Risk Management with Emphasis on Capital Protection – There is no denying the fact that there is a limitless opportunity in the investment market to create returns,but we do not chase them at the first instance. Rather than looking for extra-ordinary returns, our priority is to prevent losses, especially those which could lead to permanent loss of capital. We believe that the investment market would give us so many opportunities that if we avoid the big mistakes, a few big winners are enough to achieve satisfactory performance.
- Emphasis on Consistent Performance – Investment markets are volatile in nature where market returns oscillate between high profits and huge losses. Our endeavor is to stay in between, wherein year after year we show a consistent performance which beats the major indices in the long run. We prefer a consistent yearly return in the long run over a style where huge gains in a few years are followed by large losses. We believe in the Power of Compounding wherein you don’t work for money. Instead, your money works for you to create extraordinary wealth in the long run.
- Focus on Company Fundamentals for Stock Picking – Macroeconomic factors are important but they can at best guide investment choices,not dictate them. We do understand that macro factors like inflation, GDP numbers, interest rate, foreign exchange rate, political climate etc do impact the performance of individual securities. So many factors impact the performance of an individual security, but we cannot accurately predict their impact on performance. Hence, we apply a bottom-up approach, where we try to understand a company and its operations. If we are reasonably confident about its business and find it attractively priced, we buy without being unduly swayed by the macro factors.