Defining the universe

Primarily the stocks/securities which are exposed to the Defence growth vector. The universe shall include securities from primary as well as secondary ecosystems that are favourably impacted by the long-term growth potential effected by the growth vector and are traded on the National Stock Exchange. The universe includes the full value chain and the extensively defined ecosystem. The flexibility provided by the extensively defined ecosystem allows for a wider investment universe and significantly enhances the chances of finding mispriced opportunities while still benefiting from the growth vector.

Research

The portfolio is based on the Scientific Investing framework which sifts through the defined portfolio universe and weeds out capital destroying equities based on an analysis of the balance sheet, cashflows, growth and valuation. It curates a portfolio of capital multiplying companies with SuperNormal Profitability (economic alpha) arising from persistent competitive advantages and growth opportunities (growth alpha). A superior valuation toolkit further capitalizes on Mr. Market’s behavioral errors and selects companies available at SuperNormal Prices (value alpha), i.e. below their intrinsic values.

The portfolio allocation can depend on the degree of undervaluation. Securities that have higher discount to intrinsic value can be given higher weightage and vice versa. Securities with similar discount to intrinsic value are, typically,  given roughly equal weightages.

This smallcase will be rebalanced on an as-needed basis.