Investments
Our Mission
At Electrum we are trying to create long-term wealth for our clients and help them navigate complex markets and achieve their investment objectives through a patient, disciplined and fundamentally driven approach. We are dedicated to delivering sustainable returns, preserving capital and building trusted relationship with our clients
Our Vision
“To build a lasting legacy as a trusted and respected boutique asset management firm, known for our unwavering commitment to our clients, our people, and our community, and for our dedication to delivering exceptional investment performance and service over the long term.”
Our Services
Discretionary Portfolio Management
Non-Discretionary Portfolio Management
Equity Advisory
Our Ethos
Client first
Clients are the focus of our existence.
Agility
In an ever-changing work dynamic, we keep the golden words from John Maynard Keynes close to our heart, “When facts change, I change my mind, what do you do Sir. “
Rule number
We live by the 2 golden rules of Warren Buffet: Never lose money, Never forget Rule number Hence Return of Capital is more important than Return on Capital.
Integrity
Integrity is non-negotiable.
What Differentiates Electrum ?
1. Focus on Smaller Businesses
We strive to look for emerging businesses which has the Management bandwidth, Product positioning, Balance sheet discipline and Growth opportunities to take the business into next league.
2. Team Has to be a Learning Machine
Our team is extremely passionate about equities and are continuously looking to keep adding value to our company and industry knowledge – collectively we listen to 300-400 conference calls/ company interactions and meet dealers/ competitors on a regular basis.
3. Risk is Reality, Return is Vanity
Our focus is always on risks first as we believe that business environment is extremely dynamic and challenging – we believe focus on risks helps us to be patient and calm in downturns.
4. Invest your own Money
We do not want to be mere portfolio managers but encourage our team to be investors in the same portfolio stocks/ Portfolios, team has to own up its ideas and what better way then to have your own skin in the game.
5. Concentration on High Conviction Investments
Our focus is always on risks first as we believe that business environment is extremely dynamic and challenging – we believe focus on risks helps us to be patient and calm in downturns.
6. Own up the Mistakes
World is not perfect so are we. We do not want to shy away from our mistakes, the key to own up and correct it as quickly as possible and avoid repeating.
Our Investment Philosophy
- The core of our Philosophy lies in investing in companies with long term scalable and sustainable growth, businesses with strong moats, good corporate governance, strong execution and financial discipline.
- These companies should have products or services which can make them one of the leaders in their respective sectors.
- We use a GARP (Growth at a Reasonable Price) Style to identify and invest in our portfolio companies through our Proprietary Investment Framework ELECT.
- We focus on Bottoms up research and are sector and benchmark agnostic. We focus on clean balance sheets for companies which have potential to generate operating cashflows (Small Cap) and free cashflows (Mid and Small Caps).
- We are believers in potential cashflow generation in the business rather than Profitability in the PL statement.
Our Investment Framework
Excellent Management Pedigree
- Prudent Capital Allocation and Conservative financial management.
- Skin in the game/Shareholding Interest.
- Conflicting businesses.
- Superior Execution track record.
- Honest, Passionate, Hunger for Growth
Earnings Growth
- Growing Industry/Opportunity Size.
- Market Share Gain, Geographical Expansion, New Products Opportunities.
- Long term Sectoral Tailwinds.
- Growth Vs Market growth Estimate
Turnaround/ Value Mispricing/Contra Opportunities
- Price Value mismatch We are value seekers.
- Business in Transition Management, Product, Geography.
- Out of favor –Industry, Company available cheap.
- Special situations Spin offs, Acquisitions
Longevity and Sustainability of Business
- Competitive Advantage/ Moat Brand, Distribution, Switching costs, Technology, Low cost, Scale.
- Entry Barrier-Network Effect, Regulatory, Logistical.
- Strong Product Profile and New Product/Business Development
Capital Efficiency
- High Return on capital/ Equity.
- Low capital intensity- High Asset Turns, Low Working capital
- Strong Operating Cash Generation OCF/EBIDTA.
- Dividend Payouts/Efficient Capital deployment
Excellent Management Pedigree
- Prudent Capital Allocation and Conservative financial management.
- Skin in the game/Shareholding Interest.
- Conflicting businesses.
- Superior Execution track record.
- Honest, passionate, Hunger for Growth.
Longevity and Sustainability of Business
- Competitive Advantage/ Moat Brand, Distribution, Switching costs, Technology, Low cost, Scale.
- Entry Barrier-Network Effect, Regulatory, Logistical.
- Strong Product Profile and New Product/Business Development.
Earnings Growth
- Growing Industry/Opportunity Size.
- Market share Gain, Geographical Expansion, New products Opportunities.
- Long term Sectoral Tailwinds.
- Growth Vs Market growth Estimate..
Capital Efficiency
- High Return on capital/ Equity.
- Low capital intensity- High Asset Turns, Low Working capital
- Strong Operating Cash Generation OCF/EBIDTA.
- Dividend Payouts/Efficient Capital deployment.
Turnaround/ Value Mispricing/Contra Opportunities
- Price Value mismatch We are value seekers.
- Business in Transition Management, Product, geography.
- Out of favor –Industry, Company available cheap.
- Special situations Spin offs, Acquisitions.
Our Investment Process
Screening and Ideation
- Quantitative and Qualitative screening to identify 100 companies:
ROCE, ROE, Cash Flow, Asset Turns, Leverage, Growth - Team track record
- Industry and Market Network, Sell side brokers
- Business/ Industry Insights
Fundamental Analysis
- Annual reports, Conference calls, Management Interviews
- P&L and Balance sheet analysis
- Competition Mapping
- Business Opportunity
- Industry analysis
Management Meeting and Channel Check
- Management Meetings
- Plant visits
- Distributors, Suppliers, Competitor interactions
- Industry Specialists
Filtering and Stock Selection
- Narrow down to 35-40 companies
- Long term compounders
- Contra opportunities –lower valuations due to industry setbacks, company specific issues, out of favor
- Changing opportunity landscape-New product/Management/ Regulation
- Companies with strong tail winds for earnings growth and possible multiple expansion
Investment Filters
Management Integrity
We closely check Auditor qualifications, related party transactions, web of subsidiaries with unclear investments & strategies, contingent liabilities, empire-building, very high family remuneration, and conflicting businesses in same industries.
Ensure financials accurately reflect the franchise’s inherent strength.
Asset / Working Capital Heavy Businesses
We keep close tabs on low visibility of cash generation in long term and profits not converting into cashflows
Leverage
We closely monitor unsustainable leverage and promoter equity pledging.
Capital Misallocation History
– Regular checks on diversification in unrelated businesses.
– Investments in promoters’ private companies in unrelated areas.
Value Traps
Although we are value biased investors, we avoid value traps like high cash on balance sheet without growth/ utilization visibility and value driven by unutilized real estate without growth opportunity in core businesses.
History of Defaults
We avoid companies with a History of loan default/ debt restructuring in the company or promoter group entities
Risk Management
Price Risk
We look at investing in good business as per our investment process, we always buy high quality business at a reasonable price. We use a GARP approach to investing and always use a fair value methodology as per our research process to determine the intrinsic value of the company.
Quality Risk
Focus on clean business with good corporate governance, low leverage, using our propriety investment process ELECT , along with strong channel checks and meeting the supply and distribution chain, we select only quality businesses
Liquidity Risk
We run a liquidity analysis of our portfolios and have targeted capacities for each of our Investment Approaches as per the current liquidity in the underlying companies.
Concentration Risk
No stock to be more than 12% weight and No sector more than 35% at the time of entry (may differ in customized portfolios depending on mandate). Portfolio risk management is through sector diversification and stock weight management.
Electrum – Symbol of Wealth and Excellence
Electrum is a naturally occurring alloy of gold which was used to make Coins, Jewellery and Ornaments. The earliest known coins in the western world were minted out of electrum and it remained popular for coinage until about 350 BC. Electrum is believed to have been first used in coins around 600 BC in Lydia during the reign of Alyattes. Electrum was a preferred alloy as it is harder and more durable than pure gold. In ancient times, the chief source of electrum was Lydia, around the Pactolus River, a tributary of the Hermus, now called the Gediz Nehriin in Turkey. Unless you visit a museum or win a Nobel Prize, your best chance of finding electrum is to seek it as a natural alloy
We have christened our Company on the ancient metal as a symbol of “Wealth” and “Excellence”
Investment Approach
Electrum Laureate Approach
Electrum Laureate Approach is focused on investing in high quality growth businesses at reasonable valuations. Our approach is biased towards Investing in small and mid Sized companies with a potential to grow multifold over a longer period of time.
Key characteristics of Our Portfolio Companies
- Amongst the top players in the respective industry/ product/region
- Focus on niche capabilities/ products
- Strong management pedigree and corporate governance
- Large and growing opportunity size
- Value mispricing/ event based opportunities
Electrum S.C.A.L.E Approach
Electrum S.C.A.L.E Approach aims to invest in companies largely in midcap space. It will have sector agnostic exposure with bottom up stock picking. These are the companies which have gone past the smaller size and ready to achieve scale with better growth rates than large established companies. They are companies that can become large caps in longer term. These businesses have established themselves in market and are expected to gain economies of scale on a structural basis.
Thus we aim to invest in mid cap companies with
1) Reasonable growth prospects
2) Sustainable and Scalable business
3) Structural in nature
4) Sound financial strength
5) Reasonable valuations with investment horizon of 3-5 years
Electrum Focus
The investment objective is to generate appropriate risk adjusted returns over medium to long term by investing in equity shares of fundamentally strong listed companies across market capitalization.
Under this approach, Portfolio would be primarily invested in listed equities and opportunistically also in money market instruments, units of mutual funds, ETFs or other permissible securities/products in accordance with the Applicable Laws. Some part of money might be retained in bank account as bank balance.
Electrum Novogram Excel Approach
The investment objective is to generate appropriate risk adjusted returns over medium to long term by investing in a diversified portfolio of equity shares of fundamentally strong listed businesses with a bias towards investing in small and midcap companies.
Under this approach, portfolio would be primarily invested in listed equities and opportunistically also in money market instruments, units of mutual funds, ETFs or other permissible securities/products in accordance with the applicable laws. Some part of money might be retained in bank account as bank balance
Electrum Customised Approach
*For all details of investment approaches, risk factors and complete details, please refer to the disclosure document.