Selection Process

The company would need to have a good, clean and well reputed management which could be family owned or professionally run.

It has to be available at a reasonable valuation which could be because of headwinds in the industry or due to a down-cycle for the company. These companies are usually ‘forgotten’ and are not on anyone’s radar.

The next step is to evaluate if the company can survive through the current difficulties and come off stronger which could happen when there is a change in the management or if the existing management decides on a new strategy, or a new product category or if the market trends are changing for the positive e.g. the start of a capex cycle.

Once a company passes the above checklist, we start a deep dive into analyzing the publicly available information (balance sheet, P&L, cash flow statement, annual reports, management calls).

To get further insight, we try to get access to the management, visit their facilities and conduct our own channel checks by trying to meet any of the stakeholders (agents, dealers, ex-employees, customers) of the company. Only after we are satisfied with the research do we take a position in our portfolio.

Once we make our investment, we sit tight and hold on to it while keeping a close watch on the developments of the company. We may exit if our story has played out, or if there is a detrimental change in the company or industry. There is no specific time frame for holding onto investments. We will hold till we believe in the story and in the execution capabilities of the management.