About Abakkus Asset Manager LLP
Abakkus is an alpha focused boutique asset manager managing ~INR 20,000 crores* in long only strategies for Indian equities. Their offerings include Close ended Category III Alternative Investment Funds, Portfolio Management Services, Advisory Services for Domestic and Global Investors and UCITS Funds. In just 5 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.
Investment Approach
- Benchmark Agnostic portfolio of around 40 companies “Bottom Up” investing in companies with decent profitable growth
- Disciplined approach to investing across market caps and sectors
- Focus on a value-conscious style of investing
- Low churn long-term ideation-based approach to investing
- Endeavour to generate alpha over 3–5 years holding period
- Select IPO investments as an Anchor Investor \ QIB \ Pre IPO
Fund Characteristics
- Unique 40:30:20:10 approach to portfolio construction
- Capturing opportunities across market capitalization
- Lower volatility through large cap and larger mid-cap exposure
- Focus on alpha creation via exposure to mid, small & micro caps
- Risk discipline and management by way of position sizing
- Liquidity management as smaller capitalization companies have incrementally smaller weights
What To Expect
- Profitable Businesses
- Value Conscious Approach
- Alpha focus
- Diversification
- Value Unlocking
- Decent Earnings Growth
- Decent ROE
- Low Churn
- Investment rather than allocation
- Value paid commensurate to future profitability
AIF Positioning
Equity Market Outlook
Economic growth expected to accelerate, Valuations above 10-year average but reasonable. Indian economy relatively outperforming developed as well as other emerging markets
Portfolio Stance
Capturing opportunities across market capitalization
Approach
Value-conscious style of investing in companies having robust business models and earnings growth
Alpha Generation Approach
Investment rather than allocation-based approach across market caps
Themes we are Positive on
Financials, Domestic Growth & Consumption, Manufacturing, Capex, and Digital \ IT
Expected Market Earnings CAGR
14-15% CAGR
Investment philosophy
Risk reward equation
- Expected returns must justify the risk / uncertainty taken
- A good company might not necessarily be a good stock
- Focus on the price we pay, and value derived
- What is in the price?
Patient investors
- Buy and hold
- Invest in a stock as if investing in a business
- Think like a partner
Agile and flexible
- Each investment opportunity is looked upon individual merit
- Not constrained to a particular theme or style
Alpha generators
- Believe in investing with an endeavour to generate alpha over the markets rather than just allocating within benchmark index
- Growth companies where profitability is expected to grow higher than market average
- Fundamentally underpriced stocks with reasonable growth expectations
- Mid Cap companies with a scalable business model and growth potential to become large cap
Fundamental driven
- Bottom-up research with focus on balance sheet
- Numbers speak more than presentations and hype
- Returns ultimately are all about earnings
Happy to be contrarian
- Prefer to be first, early and/or only investors
- Do not chase the momentum
- Open to look at companies across sectors, market caps and business cycles
Why Abakkus
Experience
Backed by a well-qualified dedicated team of professionals that have cumulative experience of ~200 years
Performance
A well-established performance track record over 2 decades in public equity funds and across all market cycles
Commitment
Follow a start-up culture with high degree of commitment, urgency and passion
Positioning
Focused investment in Alpha plays beyond the large number of listed companies supported by non-consensus, in-house research and independent thoughts
Opportunistic
Greater flexibility in investing into new sectors, new themes which are backed by entrepreneur driven economy
Consistent
Investment team has delivered consistently across market cycles
About Fund Manager
Sunil Singhania : Founder, Abakkus Asset Manager LLP
- Former CIO Equities of Reliance Nippon Life Asset Management (now Nippon Life India Asset Management) overseeing ~USD 11 billion of equity assets
- First Indian to be appointed to the Global Board of CFA Institute, USA (2013-2019)
- Ex-Honorary Chairman of Investment Committee of CFA Institute (2018-19)
- Currently, on the IFRS Capital Markets Advisory Committee (CMAC) and the only Indian member to be appointed (2020-2023)
- Rated as among the best fund managers (Rated best Fund Manager by Outlook Business in 2016 & 2017 over 10-year time frame)
- CA & CFA Charter Holder
A unique MEETS framework
Management
- Quality – Capability and track record
- Capital Allocation – capex is fine if ROE is maintained or enhanced
- Capital Distribution – fair to minority shareholders
- Error in decision – Business errors vs avoidable mishaps
Earnings
- Quality of earnings vs reported numbers
- Actual earnings vs expected
- Cyclical vs Structural earnings
- Companies that can double profits in 4 years or less or where EV/EBITDA can halve in four years
Events/Trends
- Stock movement because of events.
- It can be Buy or Sell opportunity
- Events on the horizon
- Disruptive trends/New themes
Timing
- Good company is not necessarily a good investment if price is not right
- What is the price discounting
- Time frame of investment
- Mean Reversion
Structural
- Size of the opportunity
- Competitive positioning / MOAT
- Consistent growth in profits
What They Do?
Small Cap
- Invest in new sectors and emerging themes
- Bank on entrepreneurship which is thriving in India
- Companies with unique positioning in their respective sector
- Small companies but in niche sectors
- Opportunistic exposure to events, special situations
- Under Researched \ Disbelief
Micro Cap
- Undiscovered companies with long term high growth potential
- Sound businesses that are priced significantly below our estimation
- Under penetrated sectors / industries having Macro tailwinds
- Invest in potential turnaround stories
- Companies with less awareness / research
5D Investment process
DISCOVER
From universe of 6000 companies, ~1500 companies are investable
DELVE
Deeper into ~350 companies with the help of experienced investment team using MEETS framework
DEVELOP
Macro and microanalysis on >100 companies
DETAIL
Idea generation on ~75 stocks
DELIVER
Portfolio construction and risk monitoring of ~40* stocks
Exit Discipline
- Fundamentals don’t pan out as expected due to sector deterioration, company specific issues, governance issues.
- Not shy to accept when thesis goes wrong.
- Stocks may do much better than expected.
- Position becomes insignificant and can’t /don’t want to add.
- New investment idea better than existing holding in terms of risk reward.
Avoid the four “C” s
Chase Momentum
We would let fundamentals drive our investment decision rather than price movements
Churn Unnecessarily
No trading. No needless churning of the portfolio
Copy & Mimic
We will not be influenced by ‘herd mentality’. All investments have to be necessarily worked internally
Credit Risk – Fractured Balance Sheet
We believe it is very difficult to rebuild a broken balance sheet and these stocks eventually turn into value traps and hence best avoided
Risk management
Company Risk
The best way to handle company risk is by knowing in-depth details what you own and why you own it. There is no substitute for this. Our uncompromised focus on balance sheet and numbers will help us in mitigating company risk
Valuation Risk
While there is no right or wrong valuation number, we are definitely wary of overpaying. We maintain strict 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
In mid and small cap investing liquidity can be a near-term risk, the portfolio is designed to take care of this, and we would urge investors to factor a 3–5-year time horizon
Concentration Risk
Endeavour to have adequately diversified portfolio across sectors and stocks
For any queries, contact us on Mobile: +91 95616 10108, Landline: 020-48627339,Toll Free: 1800 210 1995, Email: [email protected] 
Disclaimer: Investing Involves Risk. This document is for information purposes only and should not be viewed as a legal offering document or solicitation. Offers to invest in this fund are made only by the Discretionary Portfolio Management Services Agreement. Past performance does not guarantee future results and there is no assurance that the managed accounts will necessarily achieve their objectives. We do not guarantee any returns in the hand of investors not we take any sort of accountability for the performance of the scheme. The above-mentioned data is collected from the respected Fund house please verify the same at SEBI website.