With stated client objectives to protect your wealth, beat the FD rate of return and outperform benchmark equity index over 3-5 years, we get driven by core investment principles that get reflected in our “All-Star Portfolio”.
1.Highly Profitable Consumer Companies
Our ‘All-Star’ portfolio consists of companies that are stars in their own right. Each of them has demonstrated impressive operational and financial track record over decades, thereby growing shareholder value too.
These are dominant, brand-owning and inflation agnostic consumer companies with pricing power.
To minimize 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.
2.Ethical and Passionate Management
We look for the logical things in the management – love for the business or job, long term performance, how they treat the shareholders, and importantly, how they treat themselves relative to their shareholders or owners. Apart from running the operations efficiently, we expect managements to allocate their capital and retained earnings wisely. Additionally, catalysts like buy-backs at reasonable valuations, annual dividend pay-out ratios, high quality acquisitions at sensible prices act as inputs in our investment decisions. Obviously, no management team is perfect, so we are often stuck making a judgment call. And we don't want to wait forever to find the perfect team.
Motivated by a calling — Passion to serve customers well, to nurture top performing employees, to constantly cut cost, to invest in technology and to achieve excellence in business
Reasonable Compensation, Low Related Party Transactions, Candor on Business Prospects, Fair to Partners, Generate high Return on Capital Employed (RoCE)
Prudent Capital Allocation of earnings – Reinvestment, Buy-backs, Dividends or Acquisitions
3.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 adequate ‘margin of safety’ and courageous to load them up when valuations are attractive. Till we get the right opportunity at fair valuation or any catalyst trigger, we park the investments from new as well as existing clients in liquid debt funds. We have the willingness to invest heavily when the odds are favourable, as a result of prudence and patience in the past.
2010
Gruh Finance - 20% of AUM
2010
Bajaj Finserv - 20% of AUM
2018
Merck India - 40% of AUM
In all, we don’t 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 some macro news may make investors nervous or for profit booking. We sell when:
- Our initial hypothesis is wrong,
- Company fundamentals are deteriorating and/or
- We find a company with similar or better quality at cheaper valuations.
Club Millionaire's approach, process, advice and relationship is radical from the market behaviour.We are totally comfortable with all eggs-in-one-basket ie concentrated strategy because we own a great collection of fine businesses that are well-managed and are in good shape for whatever the future brings.