About Company
Fund Snapshot
| Year of Inception | 2018 |
| Number of Stocks | 22-25 |
| Investment Horizon | Medium to Long Term |
| Fund Managers | Manish Sonthalia |
Investment Philosophy
Unique Feature
- Fair Strategy: focused exposure to a small number of key concepts through a targeted strategy. We value the degree of portfolio concentration Motilal employs (well below 20 stocks, major exposure in 2 sectors of financiers and consumption)
- Strong Investment Process: The long-term investment strategy of investing in high-quality firms is well established.
- Stable Investment Team: Individual fund managers with a fair amount of experience, supported by robust processes, driven by the top and internal research group knowledge.
- Performance: Business Opportunities Portfolio’s performance has been inconsistent, with just one out of every five calendar years seeing an improvement.
- Real wealth is not built by trading in and out in response to buy, sell, and hold suggestions, but rather by riding out the majority of the growth curve of high-quality enterprises.
- This mindset helps both investors and managers to maintain their attention on the companies they own rather than becoming sidetracked by changes in share prices.
- A strategy of purchasing high-quality stocks and keeping them for the purpose of long-term wealth accumulation substantially lowers expenses for the investor.
Q.G.L.P in a Nutshell
Quality of business x Quality of management
- Stable business, preferably consumer facing
- Huge business opportunity
- Sustainable competitive advantage
- Competent management team
- Healthy financials & ratios
Longevity – of both Q & G
- Long-term relevance of business
- Extending competitive advantage period
- Sustenance of growth momentum
Growth in earnings
- Volume growth
- Price growth
- Mix change
- Operating leverage
- Financial leverage
Price
- Reasonable valuation, relative to quality & growth prospects
- High margin of safety
A structural growth story that comprises 11% of the portfolio
Little to no risk on the asset side
- Within BFSI; we believe non-lenders; especially life insurance players are unique plays on structural growth;with little to no risks on the asset side of the business.
- This is unlike the lenders; where growth is fraught with NPA risks.
Deeply moated brands
- Barriers to entry: Brand and distribution play a crucial role
- Top 5 players account for ~90% of total industry market share.
- We expect most of the growth to accrue to Top 5 players as they continue to build on their existing strengths.
Capital efficient Businesses
- A capital efficient business with ~25% RoE for the successful players
- Growth funded internally without shareholder dilution.
- This ensures that all growth flows in to existing shareholders; a classic recipe for long term compounding.
Multi-decadal growth opportunity
- Long growth runway: With 83% protection gap (as per Swiss Re)
- We see life insurance as a structural play
- 16% allocation to life insurance companies is a testimony of our very high conviction on this sector.
Top 5 banks command 47% market share in India, versus 80% as seen in countries globally
Top 5 banks in India to consolidate market share
- The five bank concentration ratio in India stands at ~47% level; vs ~80% being the median for 30 large economies globally.
- We believe the top banks in India; especially the top 4 private banks, are very well positioned today to consolidate market share.
Strong liability franchises
- A very strong liability franchise, and good underwriting discipline are the key tenets of sustainable compounding in a lending business.
- The banks we own in the fund are the ones which clearly lead on these metrics.
PSU to PVT value migration to continue
- PSU banks have structural shortcomings of a promoter whose interests are not aligned with minority shareholders, weak underwriting capabilities, being capital starved, etc.
- Hence, expect value migration from PSU to PVT to continue.
Attractive valuations
- Financial stocks were badly hit during the sell-off caused by COVID-19
- Unlike other sectors, stock prices for banks are yet to reflect their full potential
- Believe this is a temporary mispricing for larger, well run private banks with good liability franchises and underwriting capabilities.
Learn about the experienced fund managers responsible for investment decisions, portfolio strategy, and long-term fund performance.
Raamdeo Agrawal
Raamdeo Agrawal is the chairman and co-founder of Motilal Oswal Financial Services Ltd. He is known as a renowned value investor who believes in the power of compounding. In 2019, he was among the list of billionaires according to Forbes, with a net worth of $1 billion in 2018.
Raamdeo was born and brought up in the village of Chattisgarh. He is a man with dignity and discipline. Later he moved to Mumbai to study to become a Chartered Accountant. He wrote the book Corporate Numbers Games with Ram K P. Mriparia. Mr. Raamdeo also authored The Art Of Wealth Creation.
He maintained a consistent track record of the highest integrity in tax payments for five years from FY95-FY99 and thus received Rashtriya Samman Patra by the Central Board of Direct Taxes for the same. One would be glad to know that Raamdeo Agrawal considers Warren Buffett a mentor, and his investment strategy is exceptionally inspired by him.
Mr. Manish Sonthalia
Since its establishment, Manish has been overseeing the Strategy and acting as the Director of the Motilal Oswal India Fund, Mauritius. He has worked at Motilal Oswal PMS for more than 14 years and has over 25 years of expertise in equities research and fund management. He has overseen the management of different PMS strategies and AIFs at MOAMC and served as the foundational pillar of the PMS investing process. Manish has many postgraduate degrees, such as an MBA in Finance, an FCA, a CS (Company Secretary), and a cost and works accounting (CWA).
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Disclaimer: Investing in AIF, PMS, Gift City or Mutual Fund is subject to market risk. Please read the related documents carefully. Past performance does not guarantee future results and there is no assurance that the managed accounts will necessarily achieve their objectives. Actual portfolios may differ as a result of account size, client-imposed investment restrictions, the timing of client investments and market, economic, and individual company factors. We at ALTPORT do not guarantee any returns in the hands of investors, nor do we take any sort of accountability for the performance of the scheme.