PMS bazaar, on behalf of the Investor Community, appreciates the PMS Top performers. It is with lots of pride that we recognize their performance, and we have awarded the Top-3 PMS Performers of the calendar year-2019. These are the PMSes Toppers of The Tumultuous Times.

The Calendar year 2019 has been a challenging year for India, primarily because of geopolitical, macroeconomic and social unrest reasons. The year witnessed broader market under-performance, while select few franchises performed better. While we concede that a single year will not do justice to the performance of long-term investments, curiosity prevailed, and hence we have analysed the PMS Strategies during the calendar year 2019, a particularly tumultuous period. There were 111 Portfolio strategies which have completed one year within the PMS Bazaar’s universe. The overall data appears quite satisfactory and is graphically represented as Exhibit – 1

From the Exhibit-1, it is encouraging to note that 74.77% of the PMS Portfolio Strategies have given positive returns. What is even more reassuring is that out of these, 48.65% of Portfolio Managers have returned double-digit growth. Less than 20% of the PMS strategies turned out negative.

Marcellus Consistent Compounders

Marcellus Investment Managers was founded in 2018 with the sole purpose of influencing efficient capital allocation in the Indian economy. Marcellus is intended to achieve this by channelizing household savings towards high quality Indian companies with long track records of clean governance and strong capital allocation. Marcellus focuses on delivering healthy returns while aiming to provide relatively low risk. Marcellus’ core investment management team has been together for more than 15 years and their journey and learning over the years underpin their investment philosophy.

The investment approach of Marcellus

Filter Based Portfolio:

By filtering-in companies with the history of very consistent fundamentals, it is ensured that the DNA is not affected by any disruptive changes inside or outside, due to their strong competitive moats. Such DNA sustains over the subsequent 5-10 years.

Long-term-holding for 10 years or more allows the power-of-compounding of the winning stocks dominate losing stocks (if any) to inconsequential Levels.

Low churn portfolio can be maintained through proper filter-based approach. This would reduce transaction cost as well as the taxes. Hence, the returns will be boosted by more than 120 bps CAGR, thus generating better returns over longer period of time.

Bottom-up deep dive research: This is achieved through 3 types of interventions:

Portfolio Concentration Filter creates long-list of stocks (of about 20).This dilutes the reliance on the portfolio on outstanding companies. Manual intervention is done to produce more concentrated portfolio.

Though the filter approach demands “consistent-performance”, manual intervention is beneficial to ignore “temporary-blips” in the Business cycle. Such companies are added or retained in the portfolio, through manual intervention.

Filter based portfolio has identified companies in the housing finance, which were great performers in the past 10 years due to macro-tailwinds. The logical analytical acumen of more than 14 years’ experience in the financial markets cautions that this performance may not be sustainable; such filters are avoided through manual intervention

Mr. Rakshit Ranjan, is the Portfolio Manager of Consistent Compounders. He is a B.Tech., from IIT (Delhi) and is a CFA Charter holder. He has more than 15 years of experience in Equity Analysis and Portfolio Management and served in many prestigious MNCs.

View the PMS Bazaar's Star Performer Portfolio Manager's award acceptance interview of Mr. Rakshit Ranjan, Founder - Portfolio Manager - Marcellus

IIFL Multi Cap PMS

IIFL Asset Management Limited(IIFL AMC) is an India-focused, global asset management firm. Their endeavor is to create investment products that generate sustainable risk-adjusted returns. IIFL’s differentiated suite includes Mutual Funds (MFs), Portfolio Management Services (PMS) and Alternate Investment Funds (AIFs) spanning across public and private equity, private fixed income and real estate.

During the year 2019, IIFL made significant investments in technology and people. IIFL AMC’s structure, with significant employee ownership, empowers people. Their investment edge is derived from a strong, resilient team that is adept at identifying high-yield opportunities and proactively recognizing evolving macroeconomic trends. 

In August 2018, Mr. Anup Maheshwari joined IIFL AMC as its Chief Investment Officer and Joint-Chief Executive Officer. He brings with him 24 years of experience.

Investment Approach of IIFL – Multi-cap

Only 20-25 High quality companies are selected for investment. These companies should be helmed by Effective Business Leaders, which have a robust Management architecture, with low leverage and offering large margin-of-safety. Focus will be on 2to4 High conviction sectors, based on the current economic outlook. There will be a mix of Top-down & Bottom-up approach. The portfolio strategy targets superior out-performance over the bench mark through concentrated positions.

1. Fundamental selection &Valuation rules to construct the portfolio
2. Easily understandable Business model, which should have large addressable market.
3. Ability to sustain downturn-cycle and turn-around rapidly.
4. Quality Management & Sizable Promoter Holding.
5. Consistent growth rate of 12% to 20 % CAGR, and outperforming the peers by wide margin and the revenue growth should match the EPS.
6. Low earning volatility.
7. Return on Equity - Greater than 15% and Return on Invested Capital - greater than 10%
8. Debt : Equity ratio less than 0.5 x.
9. PEG ratio less than 1x
10. Revenue growth should match the EPS.
11. Risk: Return pay-off should be at least 1 : 3

Mr. Mitul Patel, Senior Vice President & Fund Manager is the Portfolio Manager of IIFL-Multi Cap strategy. He has an overall experience of 14 years across areas of research, fund management, private equity advisory and investment banking. He also heads research for listed equities and is responsible for generating investment ideas across sectors and market capitalization. He has been instrumental in setting up the research desk at IIFL AMC and also directly tracks companies in the chemicals, auto and pharma sectors. Prior to joining IIFL, Mr. Mitul Patel had served at various prestigious organizations gaining substantial experience. 

View the PMS Bazaar's Star Performer Portfolio Manager's award acceptance interview of Mr. Mitul Patel, Sr. VP - Fund Manager, IIFL

Stallion Asset Core Fund

Stallion Asset Private Limited is a SEBI Registered (INP000006129) Portfolio Management Services company following growth investing as its core philosophy. Stallion Asset specializes in buying high quality Midcap companies that are often ignored by the analyst community. Stallion Asset aims to create 25% plus CAGR returns, through their unique & back tested investment philosophy of catching the trend and managing the risk.

Investment Philosophy

1. Buy and Rotate Strategy beats Buy and Hold strategy.
2. Every Bull Market has a Different leader; find the leader in every Bull Market and stick to it.
3. There is No Bull Market without Earnings Growth; always buy sectors with high expected sustainable growth of more than 20% for next 3-5 years.
4. Winners of Previous Bull Market will not lead the next Bull Market.
5. Prefer buying companies that are making 52-week Highs, rather than new 52-week lows.
6. The more market believes in the longevity of growth, the more valuations the stock gets. Longevity is often the mispriced portion in Capital markets.

Portfolio Construct – the 3 part divide

1. Core Portfolio:  40% to 60% - Highest Quality Leaders in their sectors with high expected growth for next 3-5 years.
2. Trends Portfolio:20% to 40% - Every Bull market has different leaders distinct from the previous Bull Market. Riding these sector trends on identifying them helps to deliver Alpha.
3. Special Situations:  10% - Focused mainly on Demergers, Buy Backs, Spin-off, etc.

Variable weightage & Style befitting the Market Cycle: Investment in the Bull Market is very different from investment in the Bear Market. In the Bear Market, focus is more on the core portfolio i.e. high-quality compounders, great free cash flow, leaders, etc., whereas, in the Bull Market, ideally increase portfolio Beta, adding more weight to the Trends segment. 

Risk Mitigation Measures: (1) Margin of Safety: Companies with limited downside risk & upside left open are only added. (2) Price Action on the Trend Portfolio: Fundamentals & Technical analysis is used for entry & exits. (3) Pre-Determined Exits Based on Valuations. (4) Diversification.

Mr. Amit Jeswani is the Founder & Chief Investment Officer at Stallion Asset. He is a Double Charter, CFA (Virginia, USA) and CMT (New York, USA), and a graduate in Business with finance from Kingston University London. He has more than 13 years of investment experience and equity advisory before he found the Stallion Asset.

View the PMS Bazaar's Star Performer Portfolio Manager's award acceptance interview of Mr. Amit Jeswani, Founder & Chief Investment Officer, Stallion Asset.

Mr. Daniel GM, Founder - Director, PMS Bazaar, bestowed the mementos to the Best Performing PMSes 2019.