Marcellus

Marcellus Kings of Capital Portfolio (KCP)

KEY PORTFOLIO ATTRIBUTES #

Year of Inception
Number of Stocks
Alpha (1Y)
Beta (1Y)

About Marcellus Investment Managers Portfolio

At Marcellus, the purpose is to influence efficient capital allocation in the Indian economy. Marcellus does this by channeling household savings towards high-quality companies with long track records of efficient capital allocation, who in turn deliver superior returns to savers.

Key People

Mr. Saurabh Mukherjea
Mr. Saurabh Mukherjea Investment Managers (PMS)
Mr. Tej Shah
Mr. Tej Shah Portfolio Manager

Investment Objective

MARCELLUS Kings of Capital is a quality portfolio that invests in a portfolio of financial services companies beyond just the usual lenders and build a portfolio of niche financial services like insurance, broking, AMCs, wealth management companies etc.

The key objective of Marcellus Kings of Capital PMS strategy is to own a portfolio of 10 to 14 high quality Financial companies (banks, NBFCs, life insurers, general insurers, asset managers, brokers) that have good corporate governance, prudent capital allocation and high barriers to entry.

Investment Strategy

Marcellus Kings of Capital  (Marcellus KCP PMS) is a focused and a concentrated fund with upto 15 stocks in its portfolio. The aim of Marcellus KCP is to construct a multi-cap financial services-focused portfolio with moated and resilient businesses. Marcellus Kings of Capital will have only those companies that have a clean balance sheet and high corporate governance as Marcellus proprietary forensic filtering eliminates businesses that have poor accounting quality.

The non-lending part of the Marcellus Kings of Capital portfolio adds resilience to the portfolio during times of stress because insurers have a lower beta than lending businesses while asset management and brokerage businesses do not take any balance sheet risks.

Investment Philosophy

At Marcellus, the Purpose is to make wealth creation simple and accessible by being trustworthy and transparent capital allocators.

The investment philosophy at Marcellus has evolved from the ideas of Kirby and Thiel, which they have refined further.

The investing approach has 3 pillars:

Clean Accounts: They have quantitative frameworks which use a combination of forensic accounting and capital allocation assessment define our investible universe.

Capital Allocation: They look for companies with superior track record of capital allocation – companies that generate free cash flows and reinvest them in the business to fuel further growth.

Competitive Advantage: The experienced investment team through in-depth primary research, constructs a portfolio of companies with deep competitive moats.

These companies are then held on for long periods of time with little or no churn, which allows them to capture the benefits of long-term compounding and deliver superior returns.

Given the inherently leveraged business models of financial services companies, the importance of each of these traits is further amplified and therefore one can put skills around forensic accounting and understanding barriers to entry to good use to create a portfolio of high quality financial services stocks.

Keeping this in mind, the Marcellus team have created a portfolio of high-quality lenders, general insurers, life insurers, asset managers and brokers.

They believe there is a massive opportunity for the banks and NBFCs in the Kings of Capital portfolio to consolidate market share as these are well run lenders with adequate capital to not only absorb NPAs but also grow post the crisis. As per RBI’s households survey, 95% of Indian wealth is in physical assets with only 5% being in financial assets. The non-lenders (insurers, asset managers and brokers) in the Kings of Capital portfolio therefore have a large structural opportunity to benefit from the financialization of Indian household savings.

Frequently Asked Questions

INTERESTING & INSIGHTFUL QUESTION THAT IS FREQUENTLY ASKED BY MARCELLUS CCP INVESTORS?

If you and i can see these companies generating so high return on capital employed, why can’t other competitors in their respective industries come chasing to take a share from them. like we have seen reliance jio taking away vodafone and bharti’s profits.

 

Is this risk not there in the marcellus underlying companies like hdfc bank, pidilite, asian paints, dr lal path labs, tcs, nestle, titan, abbott etc ??

Answer : firstly, marcellus ccp companies have created strong entry barriers for their competitors through their brand equity and through the business execution strategies followed repeatedly. this make it extremely difficult for competition to hurt market share or margins for these businesses. secondly, these companies over years have created competitive moats, which are difficult to break easily. these companies actually approached the most challenging aspect in the respective sector; rather than resolving the challenge in a simple, straight forward manner, these companies have thrown disruptions on the construct of the sector and have actually made challenge harder for everybody to operate in. solution to the problem being the strong forte of these companies, provide them strong ‘business moat’, which is not easy to replicate for others.

 

If a concentrated equity portfolio of 12-15 such companies with very high roce, is created, it can potentially deliver returns significantly higher than nifty with underlying volatility half of nifty. so, if you want to compound wealth without getting sleepless nights, look for such consistent compounders. since, earnings and return on capital of these companies is so huge and consistent, these companies enjoy high p/e and should continue to do so.

A well-researched, and concentrated portfolio of these companies is “a low risk route to stupendous wealth creation” marcellus investment managers follows this approach and offers a low cost, a low risk portfolio of clean, well run companies that deal in essential products and enjoy monopoly in their product category. this is reason marcellus pms product is named as consistent compounders portfolio.

Marcellus ccp pms comes with all flexibilities like zero entry load, zero exit load, zero fixed fee, and only one paise of custody fee.

We at pms aif world recognise marcellus ccp pms as one of the right investment products for consistent wealth creation by informed investors.

Awards & Achievements

• In 2021, Marcellus’ Consistent Compounders Portfolio or Marcellus CCP was awarded Rank #2 as the Best Newcomer PMS across all categories, on a 2Y Absolute Returns Basis. These Awards were hosted by PMS AIF WORLD, in association with IIM-Ahmedabad.

• In 2021, Marcellus’ Little Champs Portfolio or Marcellus LCP was awarded Rank #2 as the Best Newcomer PMS across all categories, on a 1Y Absolute Returns Basis. These Awards were hosted by PMS AIF WORLD, in association with IIM-Ahmedabad.

Performance Table #


Trailing Returns (%) 1m return 3m return 6m return 1y return 2y return 3y return 5y return 10y return Since inception return

QRC Report Card *




VIEW DETAILED QUALITY, RISK, CONSISTENCY ANALYSIS

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WISH TO MAKE INFORMED INVESTMENTS FOR LONG TERM WEALTH CREATION

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From the Founders & Managers of PMS

What to expect from Marcellus’ Kings of Capital PMS?

Over the past decade, India’s Financial Services sector has been hammered by demonetisation, the ILFS crisis, Yes Bank’s collapse and the Covid crisis putting extreme pressure on weak lenders. However, history shows that investing in high quality financial stocks during a crisis proves to be highly rewarding. The key objective of our “Kings of Capital” strategy is to own a portfolio of 10 to 14 high quality Financial companies (banks, NBFCs, life insurers, general insurers, asset managers, brokers) that have good corporate governance, prudent capital allocation and high barriers to entry. These companies have grown at healthy growth rates of 20%+ despite macro headwinds over the past five years, we expect these companies to grow at 20-25% supported by market share gains over the next five years.

Who should invest in this PMS?

Clients with a time horizon of at least 3 to 5 years who want to invest in high quality financial companies with an expected long-term compounding of 20-25% should invest in this PMS. Any crisis sees the stock prices of financial companies go through a steep correction due to (i) reduction in growth rates (ii) increase in NPAs and (iii) compression of valuation multiples. As the crisis recedes, high quality lenders are able to improve growth rates on the back of market share gains, asset quality normalises and resultantly valuation multiples also normalise. Kings of Capital is therefore an ideal product for investors who want to benefit from these tailwinds as we emerge from the Covid crisis.

Which is the best company through which an investor can invest in Marcellus Kings of Capital Portfolio (KCP)?

We recommend PMS AIF WORLD, because, it is one unique platform that offers real knowledge driven investing with their highly meaningful data, reports, and content that is written very well. PMS AIF World is a team of highly articulate, educated, and experienced people.

Disclaimer

#Returns as of 31 Jan 2024. Returns up to 1 Year are absolute, above 1 Year are CAGR.

*QRC Report Card data is updated quarterly. Current data is as of Dec 23.


Do Not Simply Invest, Make Informed Decisions

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