With stated client objectives to protect your wealth, beat the FD rate of return and outperform benchmark equity index over 3-5 years, we are driven by core investment principles that are reflected in our All-Star Portfolio.
Highly Profitable Consumer Companies
Our All-Star portfolio consists of companies that are stars in their own right. Each of them has demonstrated an impressive operational and financial track record over decades, thereby growing shareholder value too.
These are dominant, brand-owning and inflation agnostic companies with pricing power.
To minimise errors in analysis or events which could adversely affect intrinsic business values, we adhere to a policy of avoiding commoditised or Business to Business (B2B) companies.
Ethical and Passionate Management
We look for logical signs in management: love for the business or job, long-term performance, how shareholders are treated, and how management rewards itself relative to shareholders or owners. Apart from running operations efficiently, we expect managements to allocate their capital and retained earnings wisely. Catalysts such as buy-backs at reasonable valuations, annual dividend pay-out ratios, high-quality acquisitions at sensible prices also inform our investment decisions.
- Motivated by a calling — a passion to serve customers well, nurture top-performing employees, constantly cut cost, invest in technology and achieve excellence in business.
- Reasonable compensation, low related-party transactions, candour on business prospects, fairness to partners and high return on capital employed (RoCE).
- Prudent allocation of earnings through reinvestment, buy-backs, dividends or acquisitions.
Buy Big at Fair Valuations
Good ideas tend to be clustered together and may not come at even time intervals. We try to be disciplined by being patient enough to buy our target companies with an adequate margin of safety, and courageous enough to increase holdings when valuations are attractive. Until we get the right opportunity at fair valuation or a catalyst trigger, we park investments from new and existing clients in liquid debt funds.
2010
Gruh Finance — 20% of AUM
2010
Bajaj Finserv — 20% of AUM
2018
Merck India — 40% of AUM
In all, we do not expect to own more than 15 companies in our portfolio. Our process incorporates a long-term investment horizon, multi-year holding periods and low turnover. We do not sell our investments because macro news may make investors nervous or for profit booking. We sell when:
- Our initial hypothesis is wrong.
- Company fundamentals are deteriorating.
- We find a company with similar or better quality at a lower valuation.
Club Millionaire's approach, process, advice and relationship are radically different from market behaviour. We are comfortable with a concentrated strategy because we own a collection of fine businesses that are well managed and prepared for the future.