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O3 Securities PMS

PMS Rating

IME PMS Rating

3 of 5 stars

Not a top recommendation as it is still a young AMC at this time : o3 Securities is still too nascent a PMS house to consider recommending as an investment. There are considerable differences between investment banking & investment management, even as strong investment banking relationships can often help a PMS scale quickly. o3's ability to develop a credible PMS business will only be known in time, and until then we do not recommend investments in o3 Capital.

The PMS/AIF AMC Rating is derived on the basis of our analysis on 5 key qualitative parameters that we use to analyse the quality of a PMS/AIF Provider. These include an assessment of the size of the AMC, the pedigree of the AMC, the pedigree of the team, the value of the investment philosophy & the level of differentiation. These insights of our central research team are documented in the IME RMS, and can be accessed during a consultation call with an IME PMS specialist.

PMS Background

Discretionary AUM (716cr) | Promoter Category ()

PMS Background

o3 Securities PMS is the PMS platform of o3 capital (a respected niche Bangalore based boutique investment bank). It is a relatively new PMS (strategies having been launched only in May-2019)

PMS Investment Philosophy

o3 Securities PMS’s primary offering (o3 Core Value Strategy) uses a comprehensive framework to identify high-quality companies (superior return ratios, free cash flow record, quality management) at attractive valuations.

To prevent Capital loss follows the framework in investing in good quality businesses having good management at attractive valuations which in turns leads to above average returns.

Investment Process

  1. High Quality Business (Screening from an universe of 6000 stocks) defined by– 15+ years of business operations; having revenues over INR5 Bn; consistent returns on capital employed of over 20%; also having a consistent positive free cash flow.
  2.  Good Management (Investment universe of 200 companies) defined by– companies having a good capital allocation history; history of good corporate governance; market share track record; expected earnings growth higher than the industry.
  3. Valuation (a portfolio is created with 20-25 stocks, with minimum of 75% of portfolio from above universe) defined by– during a temporary distress or distant earnings triggers; current valuations is near historical lows; current valuation is less than future earnings growt; current valuation less than +1 SD time historical average.

Exit Strategy

  • assumption being with which the stock was bought in the first place is no longer valid
  • stock price goes well beyond what they think is worth
  • when they spot a superior opportunity at the same perceived level of risk.
  • when there is a redemption request

Risk Management 

  • A max of 10% in single stock
  • a max of 30% in single sector 
  • a minimum of 4 sectors which are uncorrelated to one another
  • No derivatives & leverage positions 
  • Average volumes of stock should support entire holding liquidation within a max of 5 trading sessions

Inv Team

Investment Team

E. A. Sundaram | 4-star rated FM

ED & CIO, Public Markets | 35 yrs Experience | 6 yrs at current firm

Past Experience: ED & CIO Equities (PGIM India Asset Managers Pvt Ltd), Director – PMS Investments (PGIM India Asset Managers Pvt Ltd), Portfolio Manager (M3 Investment Managers Pvt Ltd), Senior Fund Manager (HDFC AMC), Fund Manager (Zurich AMC), Manager – Research (SBI Fund Management Ltd)

E. A. Sundaram comes with over 3 decades of work experience in public equities, fund management, in various formats including close and open-ended funds, family offices & portfolio management services.

PMS/AIF Schemes

PMS & Listed Equity AIF Schemes

Scheme Category Style 1 yr 3 yr 5 yr Since Inc
O3 Securities Core Value Concentrated Flexi Cap Value 36.4 18.6 20.3 18.8
O3 Securities Core Value Regular Flexi Cap Value 41.2 22.5 21.7 21.3

Returns as of 30-Sep-24.

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Note: PMS AMC & Scheme Reviews and Ratings are based on IME Capital’s Proprietary Review and Rating Methodology (read more here: AMC Rating & Scheme Ratings). These reflect the unbiased views of our central research team, based on our assessment of the investment value of these PMS/AIF strategies for our investors. We follow a highly stringent rating-criteria, where approximately 50% of PMS AMC’s & strategies would be rated 2-star or below (this is not meant to indicate that these funds are not investment-worthy, but that they do not currently fulfill the requirements we focus on for recommending funds to our investors — based on our internal views on the merit of the AMC/strategy relative to peers). Reviews & Ratings are primarily based on research of publicly available information (SEBI disclosures, PMS websites, PMS-aggregation platforms, webinar recording, media interviews etc.) and no explicit consent is required from AMCs for the same. While we endeavour to do further due-diligence via direct interactions with the investment teams of AMCs, this is typically restricted to AMC’s that meet our foundational fund selection criteria (reviews on lower-rated AMCs are often based solely on publicly available information). The views reflected in our Reviews & Ratings, are our independent views and may not be shared by the AMC’s and the investment teams. Please read detailed disclaimer for more.

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