Investment Philosophy

We follow the value investment philosophy, which means that we seek to buy a security trading at significant discount to its intrinsic value. Since our focus is on discovering undervalued stocks, we don’t base our investment on macro-economic factors like GDP growth, interest rates or on the state of the stock markets. Our aim is to deliver long-term absolute returns irrespective of the state of the market indices or economy.

We determine intrinsic value as the present value of the future cash flows of a company discounted at a rate that properly reflects the time value of the money and the risks associated with it. We buy a stock if the market is price is quoting at a discount of at least 60% to the intrinsic value. We sell when the market value approaches intrinsic value or we find a security trading at a steeper discount to intrinsic value.

We are patient investors, not traders or speculators. Our time horizon is 3-5 years and we generally own 20 or as in most cases significantly lesser stocks in our portfolio. High concentration limits us to our circle of competence and helps understand the companies we invest in extremely well.