An Alternative Recipe For Investing In India Comes From California
Rob Kirby, in a note written in 1984 (in the Journal of Portfolio Management), narrated an incident involving his client’s husband. The gentleman had purchased stocks recommended by Kirby in denominations of US$5000 each but, unlike Kirby, did not sell anything from the portfolio. This process (of buying when Kirby bought but not selling thereafter) led to enormous wealth creation over a period of about ten years. The wealth creation was mainly on account of one position transforming to a holding worth nearly $1m in Xerox. Impressed the power of this approach – of buying great companies and then letting them for ten years – Kirby coined the term “Coffee Can Portfolio”.
Nearly 40 years later, Peter Thiel hit upon the same insight but this time in the context of the VC investing – great VC portfolios are defined by a couple of blazing winners at the end of ten years. Thiel calls this the “Power Law”.
Marcellus’ Investing Philosophy
At Marcellus, our Purpose is to make wealth creation simple and accessible by being trustworthy and transparent capital allocators. Our philosophy at Marcellus has evolved from the ideas of Kirby and Thiel, which we have refined further. Our investing approach has 3 pillars:
- Clean Accounts: We apply quantitative frameworks which use a combination of forensic accounting and capital allocation assessment define our investible universe.
- Capital Allocation: We look for companies with superior track records of generating free cash flows and reinvestment in their business to fuel further growth.
- Competitive Advantage: We draw upon our collective experience to perform primary research to construct a portfolio of companies with competitive advantages in their industries.
To capture the benefits of long-term compounding, we generally hold these investments for periods of [ ] years or more. .