Abakkus Personalised Opportunity-Specific Strategy

• Abakkus is a boutique asset manager with an emphasis on alpha that oversees Indian equity long-only strategies worth about INR 10,000 crores*.
• Our offerings include
  • Close-ended Category III Alternative Investment Funds
  • Portfolio Management Services
  • Advisory Services for Domestic and Global Investors
• Abakkus has established itself in the Indian equity horizon in just 4 years of incorporation in terms of performance and asset growth.
• With time, Abakkus hopes to become one of India’s most renowned and successful asset managers.

• A subset of Ultra HNW households are knowledgeable investors and know how to build wealth over the long term through equities investments.
• These investors require a particular product and a distinct strategy for investing.
• They do not wish to invest through platforms like mutual funds, alternative investment funds, portfolio management services, or direct equities in pooled or group equity investments.
• These vehicles provide comparable strategies and portfolios to small, HNI, and Ultra-HNI investors as a group or pooled investments.
• Backed by a highly-skilled, committed team of experts with a combined experience of about 200 years
• A long history of success in public equity funds over two decades, through all market cycles
• With a high level of devotion, urgency, and enthusiasm, adopt a start-up culture.
• Focused investing in Alpha plays outside the numerous public firms supported by independent, non-conformist internal research
• Greater freedom when investing in new industries and topics that an economy driven by entrepreneurs support
• The investment team has consistently produced across market cycles.

• A focused portfolio of 5-8 stocks with a selective idea-based strategy.
• Concentrate on unique and innovative concepts with favorable risk/reward ratios.
• Investment rather than distribution based on funding availability happens when we perceive opportunity in certain concepts.
• Fundamentally grounded concepts chosen through a bottom-up methodology while conforming to our unique “MEETS” Framework
• Invest to generate alpha and wealth creation, typically over the course of three to five years.
• POSS is an exclusive offering for a short time designed for a family office equity exposure.

• High Conviction: We will only invest if we believe in the idea.
• Avoid paying a very high premium or investing in overhyped names with value-conscious investments.
• Buy and Hold Fundamental bottom-up investing strategy with a 3- to the 4-year horizon in largely untapped areas
• Positive Risk-Reward: I don’t mind giving up some profits, but I’d rather have downside protection.
• Investments with an emphasis on alpha: Having a higher likelihood of success but uncertainty regarding when it will happen
• Concentrate on Earnings and P/E Ratio Opportunity: Find companies with solid fundamentals, increasing profits at fair prices, and triggers that allow for PE expansion.
• Look for stability in the investee company’s earnings and performance (or “steady & consistent”).
• Comprehensive internal fundamental research: With less dependence on market ideas and supported by a 14-member internal investing team, Stock Ideation tracks roughly 350–400 firms.

High Conviction

Look for businesses that are profitable and growing steadily. In the end, this is acknowledged by way of payment or acquisition. Additionally, markets are often willing to pay more for regularity.

Special Situations

Try to take advantage of special opportunities like M&A, demergers in conglomerates, Holdco companies, etc. As these developments take place, significant shareholder wealth could be released.

Undiscovered

Determine firms that investors are currently ignoring because of some misconceptions using primary research. The key is to pay attention to corporate developments and modifications that address market concerns and restore faith (along with rerating).

Business Turnaround

Businesses that stand to gain from changes in macro and micro factors. To revive or accelerate growth, management can also initiate a course correction.

Awaiting Growth

There are instances where stocks are trading below their intrinsic value because near-term growth has slowed. Only with clear triggers would we take them into disciplined consideration. Will be mindful to avoid falling victim to value traps.

Unique Business Model / Moat

Companies to target should have a distinctive business strategy or operational moat. Investing in fresh or developing ideas or locating non-linear firms may provide large rewards when done correctly.

How will it operate

• Minimum INR 50 crs allocation by investor
• Call of further INR 4-5 crs only upon next ideation
• Exit decisions based on the rationale for not achieving expected returns on investment
• Investing structure based on drawdowns that are comparable to the PIPE-based strategy

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

• A good company is not necessarily a good investment if the price is not right
• What is the price discounting
• The time frame of investment
• Mean Reversion

Structural

• Size of the opportunity
• Competitive positioning / MOAT
• Consistent growth in profits

DISCOVER

From the universe of 6000 companies, ~1500 companies are investable

LEADS :

• Annual report
• Analysts & reports
• In-house screeners
• Team experience
• Ecosystem
• News flow

DELVE

Deeper into ~350 companies with the help of an experienced investment team using the MEETS framework

MEETS FRAMEWORK :

• Management quality
• Earnings
• Events
• Timing
• Structural

DEVELOP

Macro and micro analysis on >100 companies

ANALYSIS :

• Management meetings
• Competitive advantage
• Potential triggers
• Peer comparison
• Financial modeling and sensitivity analysis

DETAIL

Idea generation on ~75 stocks

PORTFOLIO CONSTRUCTION :

• Liquidity
• Sector exposure
• Portfolio beta
• Risk management

DELIVER

Portfolio construction and risk monitoring of ~30* stocks

PORTFOLIO MANAGEMENT :

• News flow
• Monitoring
• Quarterly Reviews
• Sell discipline

• Fundamentals don’t work out as planned due to industrial decline, company-specific problems, and governance problems.
• Not afraid to acknowledge failure when writing a thesis.
• Stocks might perform far better than predicted.
• The position becomes unimportant and is unable or unwilling to add.
• In terms of risk versus reward, a new investment concept outperforms an existing holding.

• Knowing exactly what you possess and why you own it is the greatest strategy to manage organizational risk. There isn’t a replacement for this. Our unwavering commitment to the balance sheet and the figures will assist us in reducing business risk.
• Although there is no right or wrong valuation figure, we are cautious about paying too much. On this, we uphold a strong code of conduct.
• Instead of making a fruitless guess about the market direction, we would concentrate more on the portfolio. While we would certainly be keeping an eye on the market, exercising patience is the greatest approach to managing market risk.
• The portfolio is set up to address the near-term risk that liquidity poses in mid- and small-cap investing, but we still advise investors to factor in a time horizon of three to five years.
• This portfolio may be concentrated and not sufficiently diversified across industries and stocks.