Abakkus Emerging Opportunities
Abakkus PMS | Equity | | PMSIME's View on Abakkus Emerging Opportunities
Strategy
Concentrated Mid & small-cap Approach
Investment Fund
While the AMC & Strategy are relatively new esp compared to other larger fund houses in India, the strong investment pedigree of Sunil Singhania combined with a clearly defined investment strategy & a strong initial track record, make Abakkus Emerging Opportunities Portfolio a good option for someone seeking a high-quality investment team for long-term wealth creation.
Fund's Strategy View
The strategy crafts a diversified portfolio, free from benchmark constraints, with a preference for mid and small caps. It strategically opts for 2nd or 3rd players, avoiding excessive premiums associated with market leaders, ensuring a balanced and value-driven investment approach. With quantified benchmarks to gauge quality, growth and valuations - This approach essentially blends quality & value, while constructing the portfolio
Fund Performance
The fund has outperformed peers & is amongst the top performing schemes in this category in the last 5 year trailing returns. In terms of longer-term annual performance, performance has been highly consistent, with the fund having outperformed it's benchmark in over 80% of annual calendar years.
IME's View on Abakkus PMS
View on AMC
In a relatively short-time, Abakkus has scaled into one of the largest PMS-AIF firms in India on the back of the strong pedigree of its founder - Sunil Singhania - an industry veteran who was the former CIO of Nippon MF. The higher 5-star fund rating for a relatively newer fund, is driven by the very high pedigree of it's founder (Sunil Singhania), a strong investment team and a very clearly defined investment philosophy (driven by the MEETS framework) & research processes.
AMC's Pedigree
A combination of scale, a very pedigreed investment team, a very well defined investment philosophy and strong performance in its initial years, makes Abakkus a highly pedigreed AMC with strong long-term potential in the Indian Alternatives space.
AMC Team
Abakkus's core investment team, led by Sunil Singhania and Aman Chowhan of Reliance AMC, has over 5 decades of experience. The senior investments team, is well supported by a large research team comprising a mix of senior & junior research analysts.
Investment Philosophy
Abakkus follows a MEETS framework (Management, Earnings, Events, Timing, Structural) for investment evaluations, with quantified benchmarks for quality, growth, and valuations. This MEETS framework, is complemented by a 5D Investment Process (the defines the stock selection process starting from a larger universe to the coverage list & final portfolio companies), a 4C framework of what they avoid doing (chasing momentum, churn, copying & credit risks) and a strong risk-management framework. The investment philosophies & frameworks are amongst the most tightly defined in the industry.
Investment Philosophy
Abakkus Emerging Opportunities Portfolio is benchmark agnostic multi-cap portfolio strategy. Portfolio follows the ‘bottom-up’ approach to picking stocks. The large-cap allocation is focussed on stability with a ‘top-down’ sectoral view. They invest in three kinds of companies viz,. Growth companies, value companies and buy-and-hold companies. They prefer to be contrarian and invest with focus beyond chasing momentum, but chasing earnings.
The investment managers at Abakkus Emerging Opportunities Portfolio follow the 15:15:15 approach. Here, they aim to invest in businesses having at least two out of three criterias.
- ROE >15%
- Earnings Growth >15%
- P/E Ratio < 15
CORE TENETS OF INVESTMENT PHILOSOPHY
- Alpha Generators: Invest in growth companies with fundamentally underpriced mid-cap stocks with a scalable business model.
- Fundamentally Driven: Bottoms up research with a focus on the Balance sheet and focus on earnings.
- Happy to be a Contrarian: Open to being first/only investors not chasing the momentum.
- Agile and Flexible: Investment not constrained to a particular theme or style.
- Patient Investors: Buy and Hold i.e Invest like investing in the business.
- Risk Reward Equation: Expected returns have to justify the risk or uncertainty taken.
Investment Process
MEETS Framework
- Management (M): Evaluation based on capital allocation track record and fairness to minority shareholders
- Earnings (E): Quality of earnings, cyclical or structural in nature and ability to double profits in 4 years or less or where EV/EBITDA can half in 4 years
- Events/Trends (E): Evaluation of events on the horizon or disruptive trends/new themes
- Timing (T): driven by the principle of ‘good company is not necessarily a good investment if the price is not right’. Focus on ‘what is the price discounting’ and time horizon of the investment.
- Structural (S): Size of the opportunity, competitive moat and consistent growth in profits.
Avoid the Four C's
- Chase Momentum: let fundamentals drive our investment decision rather than price movements
- Churn unnecessarily: No trading. No needless churning of the portfolio
- Copy and Mimic: will not be influenced by ‘herd mentality’.
- Credit Risk – Fractured Balance Sheet: very difficult to rebuild a broken balance sheet and these stocks eventually turn value traps and hence, are best avoided
OPPORTUNITY MATRIX
- New themes start small: Aims to generate alpha in new and emerging themes by capitalizing on the awareness of dissymmetry.
- Near to medium-term uptrend in small sectors: Invest in business cycles of smaller companies which aren’t tracked.
- Consistency leads to re-rating: Watch for improvement in the consistency of business performance of downgraded companies and grab the opportunity as their performance is consistent.
- Deep Value: Identity companies with a lack of market enthusiasm, lack of near-term triggers, liquidity, and under-researched with some growth.
- Special Situations: Investing in unique opportunities like M&A, holdings companies trading at substantial discounts, splits in conglomerates etc.
- Steady cash-generating companies: Invest in companies generating good cash flows but limited by near-term growth opportunities.
Trailing Performance
| 1yr | 3yr | 5yr | Since Inception | |
|---|---|---|---|---|
| Abakkus Emerging Opportunities | -3.8 | 25.8 | 31 | 29.7 |
| S&P BSE 500 | -6.6 | 14.7 | 19.2 | 19.9 |
| Alpha over Broad Mkt BM | 2.8 | 11.1 | 11.8 | 9.8 |
| Nifty Midcap 150 | -5.7 | 21.8 | 26.6 | |
| Alpha over Category BM | 1.9 | 4 | 4.4 |
Performance as of: 30-Sep-25 | Inception Date: 26-Aug-20 | Performance are post-fees, pre-taxes. Global funds denominated in USD or fund currency.
Investment team
Sunil Singhania | 5-star rated FM
Founder | 31 yrs Experience | 8 yrs at current firm
Past Experience: CIO (Reliance Capital), Director - Research and Institutional Sales (Advani Share Brokers)
Sunil Singhania comes with ~3 decades of rich experience. He was a CIO at Reliance Capital for over 20 years before starting Abakkus. Prior to Abakkus, in his role as Global Head ‚ Equities at Reliance Capital Ltd., he oversaw equity assets and provided strategic inputs across Reliance Capital Group of companies including asset management, insurance, AIF, and offshore assets. And as CIO ‚ Equities, Singhania led Reliance Mutual Fund equity schemes.Furthermore, he led Reliance Nippon Life Asset Management Ltd.'s international efforts and was instrumental in launching India funds in Japan, South Korea, and the UK, besides managing mandates from institutional investors based in the US, Singapore, and other countries. He is a CA rank holder and a CFA charter holder and graduated in commerce from Mumbai University.
Aman Chowhan | 4-star rated FM
Fund Manager | 25 yrs Experience | 7 yrs at current firm
Past Experience: Portfolio Manager (Reliance Capital), Equity Analyst (Reliance MF, TAIB Securities, Tata TD Waterhouse Securities)
Aman Chowhan comes with 2 decades of experience in the equity markets. Prior to joining Abakkus, he was Portfolio Manager for all local and offshore schemes for the PMS division of Reliance Asset Management. Having worked at the Singapore office of Reliance, Aman brings along a regional and global perspective in investing and has a strong track record across ‚ benchmark, absolute long, and long-short strategies. Before joining Reliance in 2005 he was associated as a research analyst with TAIB securities, Tata TD Waterhouse, and other brokerage firms. Aman holds an MBA degree from Mumbai University.
