Marcellus Rising Giants PMS is a Concentrated 15-stock portfolios with the top 4 stocks accounting for around 40% of the portfolio. The next 5 (sizing ranks 5-10) stocks in Marcellus Rising Giants account for ~30% of the portfolio. Sizing ranks 11-15 account for the final 29% of the portfolio. Sizing in Marcellus Rising Giants is based on Longevity framework and forward EPS expectation of analysts.

For mid cap stock selection, by Marcellus Rising Giants, the basis of scoring is on ‘Longevity’ (moats, lethargy, succession planning) and EPS growth prospects. And for For small caps stock selection Marcellus Rising Giants follows a ‘Discovery’ framework i.e. growth accompanied by improving profitability and improving FCF thanks to barriers to entry.

Seven out of 15 Stocks in Marcellus Rising Giants are Aavas Financiers, Page Industries, L&T Technology Services, Info Edge, Dr Lal Path Labs, GMM pfaudler, Relaxo Footware.

Marcellus Rising Giants PMS philosophy has its roots in the Marcellus’ Asset Managers Core Investment philosophy : –

Clean accounts and governance.

Strongly moated dominant companies in niche segments not yet well discovered by the market participants.

Strong track record of capital allocation with high reinvestment in the core business and continuous focus on adjacencies for growth.

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.

Marcellus Rising Giants PMS intends to identify and invest in high quality mid-sized companies (typically less than INR 75bn market-capitalisation, predominantly in the INR 7 to 75bn range).

High quality mid-sized companies have been amongst the biggest wealth creators in Indian equities over the last 3, 5 and 10 years.

From a universe of ~450 companies in this segment, a portfolio is constructed of 15-20 companies which make it past Marcellus’ proprietary forensic accounting & capital allocation filters as well as our bottom-up stock selection & position sizing framework.