Equirus Long Horizon Fund
Fund Snapshot
| Year of Inception | 2016 |
| Number of Stocks | 15 |
| Investment Horizon | 3-5 Years |
| Scheme | Equirus Long Horizon Fund |
| Subscription | On Monthly Basis |
| Management Fee | 1% per annum charged on monthly basis based on average AUM of the month |
| Performance Fee | Fee of 20% of the profits above Hurdle Rate |
| Hurdle Rate | 10% per annum |
| Exit Load | 2% in Year 1, 1% in Year 2 |
| Redemption Notice | At least 30 days |
| NAV Calculation | Monthly, on the Valuation Day (last Business Day of each month) |
| Reporting | Monthly account statement, monthly fact sheet, quarterly letter, Semi annual audit |
| PMS Administrator | Orbis Financial Corporation Ltd. |
| Fund Manager Name | Viraj Mehta |
Investment Philosophy
Their core philosophy is to invest in small-cap and mid-cap companies available at attractive valuations. The fund invests in niche companies across segments/sectors with strong ratios and balance sheets. Apart from the company’s past performance and analytics, they also emphasise on integrity and competence of businesses.
The Equirus Value System
- Client First Focus
- Commitment to the Last
- Data-Driven Objectivity
- Ethical Dealing with all Stakeholders
- Building Relationship: 225+ Deals with 156 clients
What Equirus looks for in companies
Growth
- Sales growth
- Improving margins
Balance sheet
- No or low debt
- Deleveraging situations with high interest coverage
Return metrics
- High returns on capital employed through increasing margins and/or asset turns
Management
- High integrity with skin in the game
- Prudent capital allocation
Attractive Valuation
- Low analyst coverage/institutional holdings
- Market ignoring long term potential
Portfolio Characteristics
- Number of businesses: 19 companies
- Current cash position: 18.9%
- Last 3 years average earnings growth: 7.3%
- Latest portfolio ROE: 10.2%
- Current Portfolio PE (TTM): 17.5x
- Acquisition Portfolio PE (TTM): 13.2x
- Churn: 19% per annum (Excluding the buying/selling of Liquid Mutual Funds, stocks given to us by our investors and capital redemption by the investors)
Unique Features
Equirus Long Horizon Fund Portfolio Management Services (PMS) specializes in placing focused long-term wagers on publicly traded, high-quality Indian companies at fair prices. Our main objective as investment managers is to provide notable outperformance over the larger Indian indices over a 3-5 year period. We firmly adhere to the bottom-up methodology, and all businesses must pass our meticulous and thorough checklist. With this strategy, we can consider various securities investments across market capitalization. Unlike some companies that promise to make investments based on quality, growth, earnings momentum, or value, we are not constrained or biased. We take into account businesses in various industries without imitating any index.
The value and quality synergies are the foundation of the Equirus PMS investment concept. We want to invest in companies with long-term growth potential that are yet mostly unknown. Companies must possess the characteristics most important to long-term growth—qualities that investors have come to appreciate through time—and be trading below their intrinsic value to be eligible for inclusion in our portfolio.
Equirus Portfolio Management Services (PMS) primarily aims to make focused long-term bets.
- They are steadfast in accepting high-quality publicly traded Indian enterprises at fair prices.
- They have a very skilled and competent crew that can perform at a high level.
- They search for companies that have the potential to grow into industry leaders and pursue maximum earnings growth with minimal turnover.
Investing results
As its name suggests, the Equirus Long Horizon Fund makes long-term investments in listed securities with a three to five year time frame. Even though it’s the ideal recipe for above-average long-term profits, our devotion to good processes, sensible investment methods, and flexibility to invest in great businesses/franchises have already begun to show benefits. After more than a year after our launch, we have provided a return of about 19%. According to each client’s enrollment into the PMS, returns differ.
A Guide to Selling
You must be aware that over the past year, we have left four positions, primarily for the reasons listed below:
– Thesis is developing more quickly than anticipated with strong front-ended returns
– The initial hypothesis being incorrect or not occurring as expected
– A changing business climate that makes expected profits unappealing while stock prices remain reasonable
-Government regulations or a changing business climate hurt a company’s operations. Very high capex is financed by debt and outside equity but does not produce growth. Coming soon is a greater opportunity (in case the portfolio is fully invested)
These categories could be used to group our “sell” selections. Investments are more like moving pictures than still ones. In business, dynamics continue to change, for the better or worse. We must keep an eye on this, throw out the ones that are getting worse and keep/add. The ones that are progressing or on course.
PMS Advisory Board
Mr. Amit Chaudhary is a global business leader with 20 years of diversified
experience in Asia in CPG, Consumer Internet, Consulting, and Private Equity.
Procter & Gamble, JPMorgan, Arthur Andersen, and MOPE alumni
Dawaa Dost, India’s 1 Affordable Healthcare Company, is now being built.
Amit is also an active investor in early-stage technology and CPG/DTC firms. He holds a Chartered Accountant (AIR1) designation and a commerce degree from St. Xavier’s College in Calcutta.
He is looking forward to creating a platform for long-term investments to be channeled into value firms and successful entrepreneurs.
