Abakkus Growth Fund – 1 Category III AIF


Key Portfolio Attributes

Sunil Singhania
Sunil Singhania

Fund Category: Category III AIF

Structure: Closed Ended Cat III Alternative Investment Fund

Inception Date: 12th July 2018

Founder's Name: Sunil Singhania

Fund Manager's Experience: Sunil Singhania is the founder of Abakkus Asset Management LLP. He has over 25 years of experience.

Fund Manager's Qualification: CFA, CA from the Institute of Chartered Accountants of India (ICAI), Delhi, with an all-India rank and holds a bachelor’s degree in business from Bombay University.

Investment Objective

Abakkus Growth Fund – 1 is a benchmark agnostic diversified portfolio of 30-40 companies. Abakkus is an Alpha Focussed Asset Manager.

Investment Strategy

The portfolio of Abakkus Growth Fund – 1 follows a fundamental based ideas picked via a bottom-up approach. Large cap allocation is based on top-down sector view with focus on stability. Also, exposure to broader market companies with sustainable business and high ROEs for alpha generation. From risk management perspective, Abakkus restricts single stock exposure of less than 10 percent, and not more than 30 percent sector exposure at the time of investment.

Thus, the portfolio endeavors to generate alpha and wealth creation by buying with typically 3-5 years holding period and adhering to their “MEETS” Framework.

Abakkus Asset Managers' MEETS Framework

Management

• Check the quality, capability, and track record of the management of the investee companies

• Analyse the Capital Expenditure. Keep an eye if the ROE is maintained or enhanced.

• Check for decisional errors; whether the management makes business errors or avoidable mishaps.

Earnings

• Deep dive into financials – check for quality of earnings v/s reported numbers

• Constantly analyse the Actual Earnings v/s the Expected Earnings AND the Cyclical Earnings v/s the Structural Earnings

• Generally look to invest in companies which have the potential to double profits in 4 years or less or where EV/EBITDA can halve in four years

Events / Trends

• Monitor stock price movements because of evolving market trends

• Unlock disruptive themes & events on the horizon

Timing

• Keep a tab on price discounting

• Monitor the time frame of investment, in accordance with the Mean Reversion

Structural

• Understand the competitive positioning & the MOAT of the business

• Evaluate the size of the opportunity

• Consistent growth in profits

Investment Philosophy

Growth in Value

• Abakkus Asset Manager follows the ‘approach of growth in value investing’, which means, identifying those companies which are value picks in terms of its stock price versus its business earnings. Companies with traits & more potential  for growth in sales, market share and earnings.

• Abakkus Asset Manager believes that such companies have not only margin of safety because of the low investable price but also, a high scope of stock getting re-rated as the growth story becomes more visible to the market.

• Following Abakkus’ philosophy of finding growth in value may sound simple, but it is not easy and very few companies are able to do it well. Most get stuck in value and which over time becomes a deep value as if growth doesn’t follow.

• Abakkus Emerging PMS and AIF products objectively invest in growth companies at lower price. These are those companies where profitability is expected to grow higher than the market average and, fundamentally companies share is underpriced.

Patient Investors

• Abakkus Asset Manager follows Buy & Hold. This means, investment team at Abakkus Invests in company’s stock/share, as if investing in the business like a partner and not like a share trader.

Maximising Alpha

• Abakkus Emerging PMS / AIF invests in small & mid companies with a scalable business models. This means businesses with strong growth potential of becoming larger companies where by small cap becomes mid cap and mid cap becomes a large cap over time.

Fundamentals Driven

• Abakkus Asset Manager follows a Bottom-up research. This means, selecting portfolio companies with a focus on profit & loss statements, balance sheet, cash flow statements, and valuations.

Contrarian Approach

• Abakkus prefers to be a contrarian: Investing in companies, where other investors still do not have high conviction. Based on knowledge of companies growth potential, once convinced, Abakkus doesn’t hesitate investing early, as a first investor or as an only investor.

Avoid 4 Cs

• Chase Momentum

• Churn Unnecessarily

• Copy & Mimic

• Credit Risk – Fractured Balance Sheet

Exit Discipline

• Exit if fundamentals don’t pan out as expected due to sector deterioration, company specific issues, governance issues

• Not shy to accept when thesis goes wrong

• Exit if position becomes insignificant and can’t / don’t want to add

• Exit if a new investment idea stems up which is better than existing business(es) in terms of risk reward

Awards & Achievements

Across Abakkus PMSs & AIFs

• In 2023, Abakkus Asset Manager Growth Fund-I, a Long Only Cat III AIF, was awarded Rank #2 in the Best Long Only Cat III AIF, on 3Y Risk-Adjusted Returns. These Awards were hosted by PMS AIF WORLD, in association with IIM-Ahmedabad.

• In 2023, Abakkus Asset Manager’s Emerging Opportunities Fund-I, a Long Only Cat III AIF, was awarded Rank #1 in the Best Long Only Cat III AIF, on 3Y Risk-Adjusted Returns. These Awards were hosted by PMS AIF WORLD, in association with IIM-Ahmedabad.

• In 2022, Abakkus Asset Manager Growth Fund-I, a Long Only Cat III AIF, was awarded Rank #2 in the Best Long Only Cat III AIF, on 3Y Risk-Adjusted Returns. These Awards were hosted by PMS AIF WORLD, in association with IIM-Ahmedabad.

• In 2021, Abakkus Asset Manager’s Emerging Opportunities Fund, a Long Only Cat III AIF, was awarded the winner in the Best Long Only Cat III AIF, on 1Y Absolute Returns. These Awards were hosted by PMS AIF WORLD, in association with IIM-Ahmedabad.

• Mr. Sunil Singhania has been revered as the amongst the Best Fund manager by Outlook Business in 2016 and 2017 over a 10-year time span.

• Reliance Growth Fund, a midcap oriented fund directly managed by Mr. Sunil has unique distinction of having grown over 100 times in 21 years. Also, the first fund in India to have a NAV of Rs. 1,000+.

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