1 st November 2017 INDEX Meaning of Aequitas Equity Advantage Why - - PowerPoint PPT Presentation
1 st November 2017 INDEX 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
1st November 2017
Meaning of Aequitas Equity Advantage Why Aequitas? Process flow Risk Pitfalls we avoid Discipline Our Report Card Investment Philosophy
Our Stock picks Key personnel Best in class process Contact details Disclaimer
Aequitas Investment Aequitas Investment
Aequitas is the Latin goddess of Equity and
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.
The word “Equity” originates from the Latin word Aequitas
Equity Advantage
3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00
31.4
❖ Assumption - A monthly SIP of Rs. 1000 started in 1979 and increased every year by 10% till 2016 ❖ Monthly SIP in 2016 will be Rs. 34000 and total investments over the period will be Rs. 3.99 mn ❖ The value of that portfolio today would have been Rs. 31.4 mn Equity investments may not always give positive returns. Past performance may or may not be sustained in future. Aequitas Investment
3.99
Why Aequitas ?
Low churn ratio -tax free returns and low transaction cost Tax efficient investing; tax free returns No distributors and intermediaries; grown through references Best risk adjusted returns Best 3 year performance
Aequitas Investment
What Aequitas does differently!!!
We don’t work with Distributors. Never have, never will ! We don’t watch CNBC. It is Cartoon Network for the Business Community! 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
capacity utilisation
EV/Sales, PE ratio, EV/EBITDA
Analyst meets
re-rating
Aequitas Investment
RISK
Ben Graham called a “permanent loss of capital”.
BETA, VAR etc. which we do not subscribe to.
Aequitas Investment
Valuation Risk Earnings Risk Balance Sheet Risk Risk of buying stocks dear without adequate margin
safety. Reasonable valuation is the cornerstone
all
investment decisions. Risk that current earnings could decline due to technological changes, economic changes
deterioration in management The risk
an
leveraged balance sheet which is ignored during good times as the weak balance sheet is ignored 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
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 Oct 2017
Aequitas Nifty Mid Cap Index Small Cap Index Avg Small & Mid 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
things differently. Buying in popular names will not give Multi-bagger returns The valuation has to be
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
companies
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
On a trailing basis the portfolio PE ratio is less than 12x cyclically adjusted 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 Finolex Cables
✓
Industry Leadership
✓ ✓
Low debt to Equity (<1 )
✓ ✓
Institutional Ownership (<20%)
✓ ✓
Long term track record (>10 years)
✓ ✓
Promoter ownership (>50%)
✓ ✓
Valuation (<12 PE)
✓
Introduction of Vannemei Shrimps Catalyst Exceptional write off’s
Our Stock Picks
Aequitas Investment
HEG Ltd. Rain Industries
✓
Industry Leadership
✓ ✓
Low debt to Equity (<1 )
✓
Institutional Ownership (<20%)
✓ ✓
Long term track record (>10 years)
✓ ✓
Promoter ownership (>50%)
✓
Valuation (<12 PE)
✓
Global GE capacity shutdown Catalyst Aluminium Industry Turnaround
Our Stock Picks
Aequitas Investment
CCL Products Heritage Foods
✓
Industry Leadership
✓ ✓
Low debt to Equity (<1 )
✓ ✓
Institutional Ownership (<20%)
✓ ✓
Long term track record (>10 years)
✓
Promoter ownership (>50%)
✓ ✓
Valuation (<12 PE)
✓
Commencement of Vietnam plant Catalyst Healthy dairy sector outlook
Our Stock Picks
Aequitas Investment
Maithan Alloys Motilal Oswal
✓
Industry Leadership
✓ ✓
Low debt to Equity (<1 )
✓ ✓
Institutional Ownership (<20%)
✓
Long term track record (>10 years)
✓ ✓
Promoter ownership (>50%)
✓ ✓
Valuation (<12 PE)
✓
Subsidiary Turnaround Catalyst Direct Play on Stock Markets
Our Stock Picks
Aequitas Investment
Garware Wallropes Zuari Agro Chemicals
✓
Industry Leadership
✓ ✓
Low debt to Equity (<1 )
✓
Institutional Ownership (<20%)
✓ ✓
Long term track record (>10 years)
✓ ✓
Promoter ownership (>50%)
✓ ✓
Valuation (<12 PE)
✓
Buy-back Catalyst Fertilizer Reforms
SIDDHARTHA BHAIYA, MD and Fund manager
❖ Siddhartha a qualified Chartered Accountant is the driving force behind Aequitas & has over 16 years of experience into Equity research and Equity Fund Management. ❖ Siddhartha started his career as a Research Analyst with Sushil Finance and has worked with Strat cap Securities, Principal PNB AMC & Reliance Capital Asset Management (RCAM). ❖ Siddhartha was part of RCAM for more than 6 years & had graduated to become a Fund Manager. ❖ Siddhartha has experience across all market capitalizations and is a specialist in bottom up stock selection.
NEERAV SHAH– Director, Operations and Compliance
❖ Neerav is a qualified Chartered Accountant and has more than 12 years experience in the capital markets. ❖ Neerav has handled operations, back office, fund accounting & dealing functions at various points in his stint at Reliance and Birla AMC.
Key Personnel
Aequitas Investment
Aequitas Investment
Best in class processes
Working with leading service providers to ensure best in class services to clients
Aequitas is a SEBI registered portfolio management firm Tie-up with HDFC Bank for banking services Tie-up with Top institutional brokers for broking services Tie-up with IL&FS for providing custodian and fund accounting services.
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 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
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
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.
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.
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
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
Aequitas Investment Aequitas Investment