Abakkus Growth Fund – 2

Fund Snapshot

Investment Philosophy

Abakkus Asset Manager LLP is an Indian asset manager that focuses on alpha. It was founded in 2018 by Sunil Singhania and is named after the simplest ancient computing equipment, the abacus. Abakkus’ objective and vision is to become one of India’s most respected and successful asset managers.

The Abakkus portfolio beliefs have been moulded by this philosophy:-

• Profitability is predicted to expand faster than the market average for growth companies.
• Stocks with acceptable growth prospects that are fundamentally undervalued for value companies.
• Buy and hold: Invest in stocks as if you were investing in a company. Invest as if you’re a partner.
• Small businesses with a scalable business plan that have the potential to grow into large cap enterprises over time
• Research from the bottom up with a focus on the balance sheet.
• Earnings, Earnings, Earnings, Earnings, Earnings, Earnings, Earnings, Earnings

Unique Feature

Abakkus is a solid AMC to consider investing in because of the strong track record of initial performance, the high credentials of the main investment team, and a well-defined investment strategy. The other unique features are:

• Diversified all-cap portfolios without regard to benchmarks.
• Fundamental concepts were chosen via a bottom-up methodology.
• allocation of large-cap stocks based on a top-down sector approach with stability in mind.
• Alpha results from exposure to businesses with sustainable operations and strong ROEs in a larger market.
• Try to build alpha and wealth by purchasing with a normal holding time of 3-5 years.
  15:15:15 Restrictions: Invest mostly in businesses meeting at least two of these three requirements.

Portfolio Characteristics

• Benchmark Agnostic Flexi-cap diversified portfolio of around 30 companies
• Endeavor to generate alpha over 3-5 years holding period
• Limited exposure of up to 15% in smaller companies\special situations at the time of investment to generate additional alpha
• Select IPO investments as an Anchor Investor \ QIB \ Pre-IPO.
• Single stock exposure at max 10% and sector exposure below 30% at the time of investment

– Abakkus is an alpha focused boutique asset manager managing over INR 7000 crores* in long only strategies for Indian equities
– Their offerings include

• Close ended Category III Alternative Investment Funds
• Advisory Services for Domestic and Global Investors
• Portfolio Management Services

– In just 3 years of incorporation Abakkus has established itself in the Indian equity horizon both in terms of performance and growth in assets
– Ambition and vision is to make Abakkus, one of India’s most revered and top performing asset managers over time

Risk

• Concentration risk: Diversified portfolio of around 30 companies, single stock exposure limited to less than 10% and sector exposure limited below 30% at the time of investment.
• Company risk – The best way to handle company risk is by knowing in-depth details about what you own and why you own. There is no substitute for this. Our uncompromised focus on balance sheet and fundamental numbers will help us in mitigating the same.
• Valuation risk – While there is no right or wrong valuation number, we are definitely wary of overpaying. We would be maintaining discipline on this.
• Market risk – We would be focusing more on the portfolio than trying the futile guess over where markets are headed. While we would be definitely monitoring the market, we believe the best way to handle market risk is by being patient.
• Liquidity risk – Liquidity can be a near term risk in broader market, however the flexi cap portfolio is designed to take care of this, with the ability to move across large cap and broader markets providing stability and liquidity to the portfolio. We would urge investors to factor in a 3–5 years time horizon for investing.