1 st April 2019 INDEX Meaning of Aequitas Equity Advantage Why - - PowerPoint PPT Presentation

1st April 2019

Meaning of Aequitas Equity Advantage Why Aequitas? Process flow Risk Pitfalls we avoid Discipline Our Report Card Investment Philosophy

• Multi-bagger Approach
• Portfolio Construction
• Company Attributes

Our Stock picks Key personnel Best in class process Contact details Disclaimer

INDEX

Aequitas Investment Aequitas Investment

Aequitas is the Latin goddess of Equity and

• Fairness. She is most often depicted holding a pair of

scales to represent Fair Dealings and Equality. She is shown in a dignified pose, wearing a diadem and holding a sceptre or staff, and sometimes She is also given a cornucopia, the symbol of abundance and wealth. She represents true fairness, a

different concept from justice for justice is under the law, and must follow it to the letter. Some have seen in her a Goddess of honest merchants and fair dealings in contracts, negotiations, and other merchant-

related endeavours: by this definition the cornucopia is seen as a symbol of the wealth to be gained through fair enterprise.

Aequitas

Ae Aequit uitas as

The word “Equity” originates from the Latin word Aequitas

Why Aequitas ?

Low churn ratio & low transaction cost Tax efficient investing; lower taxes on long term holdings No distributors and intermediaries; grown through references Best risk adjusted returns Best 5 year performance

Aequitas Investment

What Aequitas does differently!!!

We don’t work with Distributors. Never have, never will ! We don’t watch financial news channels! We don’t use Bloomberg. It’s an avoidable distraction! We have only one product. Only one yardstick to measure our performance! No marketing person. Our product should be good enough to sell by itself! Bespoke portfolios, no model portfolio. Models look good only on the ramp!

Aequitas Investment

Process flow

SCREENERS RESEARCH PORTFOLIO CONSTRUCTION ONGOING RESEARCH

• Sales growth, PAT growth,

capacity utilisation

• Valuation dislocation -

EV/Sales, PE ratio, EV/EBITDA

• Debt
• Dividend track record
• Promoter ownership
• Insider Buying
• Industry Leadership
• Credit rating
• Long term track record
• Annual report
• Quarterly results
• Industry & company news
• Management interviews
• Third party research
• Management meetings
• Press releases
• Conference calls/

Analyst meets

• 15-20 stocks
• Balance across sectors
• Catalyst for stock

re-rating

Aequitas Investment

RISK

• Risk is not a number, it is a concept or a notion. Risk equates to what

Ben Graham called a “permanent loss of capital”.

• Modern finance measures risk on metrics like standard deviation,

BETA, VAR etc. which we do not subscribe to.

• We measure risk on 3 parameters

Aequitas Investment

Valuation Risk Earnings Risk Balance Sheet Risk Risk of buying stocks dear without adequate margin

• f

safety. Reasonable valuation is the cornerstone

• f

all

• ur

investment decisions. Risk that current earnings could decline due to technological changes, economic changes

• r

deterioration in management The risk

• f

an

• ver-

leveraged balance sheet which is ignored during good times in favour of the cyclically high and un- sustainable earnings.

Aequitas Investment

PITFALLS WE AVOID

IPO’s Leverage Fad or hot sectors Low promoter holding Corporate governance QIP’s or secondary equity sales High institutional ownership Expensive valuations

DISCIPLINE

• Avoid impulsive decisions
• Don't focus much on market movements
• Don't chase winners or hot stocks
• Avoid trading and short term investments
• We don't do derivatives

Aequitas Investment

Our Report Card

Past performance is no guarantee of future results. Past performance may or may not be sustained in future. Aequitas Investment Chart depicts absolute performance since inception; Returns are adjusted for inflows/ outflows and are after expenses; 31st March, 2019 Aequitas Nifty Mid Cap Index Small Cap Index Avg Small & Mid Cap MF Cap MF

Investment Philosophy

Aequitas Investment

Multibagger Approach

Aequitas Investment

GROWTH CONTRARIAN VALUE

The company has to be a growth company with above Average growth potential for The next 3-5 years . Markets reward a higher PE multiple for growth companies Contrarian approach does not mean doing the opposite

• f others, it means doing

things differently. Buying in popular names will not give Multi-bagger returns The valuation has to be

• reasonable. This is important

because there has to be potential for re-rating. A combination of EPS growth and PE re-rating leads to Multi-bagger returns

Doing things differently Above average growth Cheap valuation ensures potential re-rating

X X

M u L T I B A G G E R

=

Portfolio Construction

• We invest in quality companies with a focus on small and mid-cap growth

companies

• Most market participants focus on price; we focus on company fundamentals
• We aim to construct a portfolio of 15-20 stocks across various sectors
• Invest with a 3-5 year horizon with a focus on low churn rate
• Value can remain value for long time. We actively look for catalysts which will

lead to stock rerating.

Industry Prospects Quality Companies

Concentrated Holding

Long-term Outlook Catalyst Aequitas Investment

Company Attributes

Most of the companies in our portfolio are industry leaders with a strong sustainable competitive advantage

Industry Leaders

Companies need to have very low debt levels and some of the companies are in fact net cash positive

Low Debt

Good dividend paying record, corporate governance practices & sound long term performance record is a must.

Management

The portfolio PE ratio is less than market PE ratios (adjusted for cyclicality in earnings).

Valuations

Majority of our companies have done buy-back / creeping acquisition in the 12 months prior to our initial acquisition

Creeping acquisition/ buybacks

Our portfolio includes companies with strong and consistent cash flow generation

Cash flow

Aequitas Investment

Our Stock Picks

Aequitas Investment

Avanti Feeds Finolex Cables

✓

Industry Leadership

✓ ✓

Low debt to Equity (<1 )

✓ ✓

Institutional Ownership (<20%)

✓ ✓

Listing History (>10 years)

✓ ✓

Low Equity Float

 ✓

Valuation (<12 PE)

✓

Introduction of Vannamei shrimps Catalyst Exceptional write offs

Our Stock Picks

Aequitas Investment

HEG Ltd. Garware

✓

Industry Leadership

✓ 

Low debt to Equity (<1 )

✓ ✓

Institutional Ownership (<20%)

✓ ✓

Listing History (>10 years)

✓ ✓

Low Equity Float

✓ ✓

Valuation (<12 PE)

✓

Global GE capacity shutdown Catalyst Buyback

Our Stock Picks

Aequitas Investment

CCL Products Heritage Foods

✓

Industry Leadership

✓ 

Low debt to Equity (<1 )

 ✓

Institutional Ownership (<20%)

✓ ✓

Listing History (>10 years)

✓ ✓

Low Equity Float

✓ ✓

Valuation (<12 PE)

✓

Commencement of Vietnam plant Catalyst Healthy dairy sector outlook

Our Stock Picks

Aequitas Investment

Vindhya Telelinks Maharashtra Seamless

✓

Industry Leadership

✓ ✓

Low debt to Equity (<1 )

✓ ✓

Institutional Ownership (<20%)

✓ ✓

Listing History (>10 years)

✓ ✓

Low Equity Float

✓ ✓

Valuation (<12 PE)

✓

Increase in Order Book Catalyst Anti Dumping Duty on Pipes

Aequitas Equity Fund

KEY PERSONNEL

SIDDHARTHA BHAIYA, Managing Director & Fund Manager

Siddhartha founded AICPL in 2012 with the aim of creating long term wealth for

• clients. As a fund manager of AICPL, Siddhartha has outperformed the NIFTY in

6 out of 7 years and delivered a CAGR of 37.77%. He is a qualified Chartered Accountant and prior to AICPL, managed funds at Reliance Capital Asset Management.

NEERAV SHAH, Director - Operations

Neerav is a qualified Chartered Accountant and has more than 14 years of experience in capital markets. Neerav is a part of Aequitas since inception. In the past he has handled operations, fund accounting & dealing functions at various points in his stint at Reliance Capital Asset Management and Birla Sunlife.

Aequitas Equity Fund

BEST IN CLASS PROCESSES

Working with leading service providers to ensure best in class services to clients

SEBI registered Cat III fund Audit & Tax consultants Top Institutional Brokers Bankers Custodians Trustee to the Fund

Reporting

❖ Monthly Performance appraisal statement ❖ Monthly Portfolio appraisal statement ❖ Monthly transaction statement ❖ Monthly bank book ❖ Audited statements at end of financial year

Contact Details

Aequitas Investment

704/705, 7th floor, Balrama Building, Plot no 3c, E block, Bandra Kurla Complex Mumbai 400 051 siddhartha.bhaiya@aequitasindia.in neerav.shah@aequitasindia.in Siddhartha Bhaiya : +91 93221 85876 Neerav Shah: +91 93229 33951 www.aequitasindia.in

Investment features and fee structure

Minimum Investments Residents – INR 10 crs. Non Residents – USD 1.5 mn Suitable time frame 3 years Mode of inflow Cash inflow or stock transfer Fees 2% of daily average AUM to be charged on a monthly basis Performance sharing 10% profit sharing with high water marking to be charged annually at the end of financial year

• The views expressed herein are the personal views and constitute only the opinions and do not constitute any

guidelines or recommendation on any course of action to be followed by the readers. This information is meant for general reading purpose only and is not meant to serve as a professional guide for the readers. This document has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. The Sponsor, Aequitas Investment Consultancy Private Limited (AICPL) or any of their respective directors, employees, affiliates or representatives do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such information. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and opinions given fair and reasonable. This information is not intended to be an offer or solicitation for the purchase or sale of any financial product or

• instrument. Recipients of this information should rely on information/data arising out of their own investigations.

Readers are advised to seek independent professional advice and arrive at an informed investment decision before making any investments. The Sponsor, AICPL or any of their respective directors, employees, affiliates or representatives shall not be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including lost profits arising in any way from the information contained in this material.

• The Sponsor, AICPL, any of their respective directors, employees including the fund managers, affiliates,

representatives including persons involved in the preparation or issuance of this material may from time to time, have long or short positions in, and buy or sell the securities thereof, of company(ies) / specific economic sectors mentioned herein.

• Risk factors: Investments in securities are subject to market risks. There are no assurances or guarantees that the
• bjectives of any of the Products will be achieved. The investments may not be suited to all categories of investors. The

value of the Portfolios can go up or down depending on various market factors. Past performance of the Portfolio Manager does not indicate the future performance of the Products or any other future Products of the Portfolio

• Manager. Investors are not being offered any guaranteed or indicative returns through any of the Products.

The names of the Products do not in any manner indicate their prospects or returns. The performance of the Products may be adversely affected by the performance of individual companies, changes in the market conditions, micro and macro factors and forces affecting capital markets in particular like interest rate risk, credit risk, liquidity risk and reinvestment risk. The Portfolio Manager is not responsible or liable for any loss resulting from the operations of the Products/ Portfolios. Each portfolio will be exposed to various risks depending on the investment objective, investment strategy and the asset allocation. Non-Diversified Portfolio tends to be more volatile than diversified portfolio. AICPL is a SEBI registered Portfolio Manager. Please read the Disclosure Document before investing.

Disclaimer

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