White OAK India Equity Portfolio

Fund Snapshot

Investment Philosophy

• Our investment strategy is based solely on fundamental stock selection from the bottom up.
• We invest in businesses based on stock selection rather than macro factors, which is a simple but powerful investment philosophy.
• We believe that investing in great businesses at attractive prices yields outsized returns over time. A great business is well-managed, scalable, and generates higher returns on additional capital.

Attributes They look for

Superior returns on incremental capital

• Industry competitive intensity
• Sustainable competitive advantage

Scalable long term opportunity

• Industry potential versus current size
• Expanding market share and scope

Strong execution and governance

• Drive to create long-term value
• Interests aligned with minority shareholders

Valuation Framework

Intrinsic value = present value of future cash flows

• Economic FCF rather than accounting one
• Terminal value based on greatness of business

Value excess returns on capital vs capital employed

• Assess cash flows net of cost of capital
• OpcoFincoTM multiples for relative comps

Aim to avoid businesses with weaker characteristics

Poor corporate governance

• Siphoning of cash or value
• Manipulation of stock prices
• Unethical business practices
• Misaligned interests
• Examples
  • Numerous across sectors
  • Certain commodity companies

Weak returns on incremental capital

• Excessive competition in capital-intensive industry
• Mis-allocation of capital
• Empire building
• Examples
  • Conglomeration without capabilities

Substitution or obsolescence risk

• Existential threat from technological developments
• Examples
  • Print media from online
  • Wind energy from solar
  • Combustion engine from electric vehicles

White OAK India Equity Portfolio

Prashant Khemka, the former CIO of Goldman Sachs Asset Management’s India Equity and Global Emerging Markets Equity divisions, launched White Oak Capital. The four pillars of White Oak’s performance-first investment culture include a stock selection-based philosophy, a high-caliber research staff, a rigorous analytical approach, and a balanced portfolio design framework. White Oak has research teams in India and Singapore and sales and distribution centres in Switzerland and the United Kingdom.

The four pillars of White Oak’s performance-first investment culture include stock selection-based philosophy, a high-calibre research staff, a rigorous analytical approach, and a balanced portfolio design framework.

Background of WhiteOak Capital Group

• One of the few in the industry with DNA of investment management
• Group of Professionals led by an investment professional as ‘Founder’ to get

SEBI license to set up an Asset Management Company (AMC)

• Core competence in domestic and global emerging equity markets

Why WhiteOak Capital

Large Investment Team: Covering ~1000 Stocks with more than Rs. 1000 Crore Market Cap

Balanced Portfolio Construction: Portfolio of Pro-cyclical and Counter-cyclical stocks to help reducing macro economic shocks

Sectoral Analyst: Team within Team Structure : Each sector is tracked by several analysts for in-depth analysis

Analysts’ Experience: Many analysts in team are tracking the same sector for more than a decade

Forensic for Negative List of Stocks: Helps reduce possible accidents due to poor corporate governance

Tactical Allocation to Small Caps: to capture compelling opportunities in this segment

Focused Investment Culture

Performance first

People: Team of Sector Experts with Global Experience Deep bench of Seasoned Stock Pickers Team within Team Structure

Bottom-up Stock Selection-based Philosophy: Buy great businesses at attractive values. Invest in business, don’t bet on macro

Time Tested Process: Disciplined Fundamental Research Proprietary Opco Finco TM analytical framework

Balanced Portfolio Construction: Aim to avoid top down bets on macro factors Aim to ensure performance a function of stock selection

Investment Process

• Observe a broad universe: Screen out poor governance Avoid weak characteristics Stay alert to structural changes Look for desired attributes
• Identify and research great businesses: Analyze in depth Maintain ongoing research Assess relative greatness
• Invest in the attractively valued: Wait until value emerges Act when opportunity presents

Aim to adhere to a time tested analytical framework in a disciplined manner

• Company visits & field work Supply chain meetings
• Business Assessment Financial modelling
• Combination of business & value Compare across opportunities
• Business evolution Monitor value gap

Aim to ensure performance is a result of skill rather than chance

• Balanced portfolio of select companies agnostic to benchmark
• Focus on ensuring alpha generation is a function of stock selection
• Aim to consciously avoid market timing or sector rotation or other such top-down bets
• Understand, monitor, and aim to contain residual factor risks that are by-product of stock selection
• Typical exposure limits Single stock: 10% at market value, Single promoter group: 25%

Capital Allocation

Top 5 Stock Holdings

Top 10 Allocated Sectors

Fund Analysis