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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 InvestmentAequitas 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
Aequitas
The word “Equity” originatesfrom 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 PORTFOLIOCONSTRUCTION
ONGOINGRESEARCH
- 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 dearwithout adequate marginof safety. Reasonablevaluation is thecornerstone of all ourinvestment decisions.
Risk that current earningscould decline due totechnological changes,economic changes ordeterioration inmanagement
The risk of an over-leveraged balance sheetwhich is ignored duringgood times in favour ofthe 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 MFCap MF
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
of 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 valuationensures potentialre-rating
XX
MuLTIBAGGER
=
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.
IndustryProspects
QualityCompanies
ConcentratedHolding
Long-termOutlook
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 generationCash 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 ComplexMumbai 400 051
[email protected]@aequitasindia.in
Siddhartha Bhaiya : +91 93221 85876Neerav 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 atthe end of financial year
• The views expressed herein are the personal views and constitute only the opinions and do not constitute anyguidelines or recommendation on any course of action to be followed by the readers. This information is meant forgeneral reading purpose only and is not meant to serve as a professional guide for the readers. This document hasbeen prepared on the basis of publicly available information, internally developed data and other sources believed tobe 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 providedherein, due care has been taken to ensure that the facts are accurate and opinions given fair and reasonable. Thisinformation is not intended to be an offer or solicitation for the purchase or sale of any financial product orinstrument. 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 beforemaking any investments. The Sponsor, AICPL or any of their respective directors, employees, affiliates orrepresentatives shall not be liable for any direct, indirect, special, incidental, consequential, punitive or exemplarydamages, 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, havelong or short positions in, and buy or sell the securities thereof, of company(ies) / specific economic sectors mentionedherein.
• Risk factors: Investments in securities are subject to market risks. There are no assurances or guarantees that theobjectives of any of the Products will be achieved. The investments may not be suited to all categories of investors. Thevalue of the Portfolios can go up or down depending on various market factors. Past performance of the PortfolioManager does not indicate the future performance of the Products or any other future Products of the PortfolioManager. Investors are not being offered any guaranteed or indicative returns through any of the Products. Thenames of the Products do not in any manner indicate their prospects or returns. The performance of the Products maybe adversely affected by the performance of individual companies, changes in the market conditions, micro and macrofactors and forces affecting capital markets in particular like interest rate risk, credit risk, liquidity risk andreinvestment risk. The Portfolio Manager is not responsible or liable for any loss resulting from the operations of theProducts/ Portfolios. Each portfolio will be exposed to various risks depending on the investment objective, investmentstrategy and the asset allocation. Non-Diversified Portfolio tends to be more volatile than diversified portfolio. AICPL isa SEBI registered Portfolio Manager. Please read the Disclosure Document before investing.
Disclaimer
Aequitas InvestmentAequitas Investment