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Abakkus Emerging Opportunities

Scheme Rating

IME Scheme Rating

5 of 5 stars

Can be considered for Investing: 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.

IME Strategy Rating

5 of 5 stars

Concentrated Mid & small-cap Approach: 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

PMS Scheme Ratings are driven by IME’s Proprietary Scheme Rating Methodology, which takes into account our ratings of the Scheme’s investment strategy, its maturity, the investment team, and our separate rating on the AMC that runs this particular scheme. Our views on each of these individual criteria are available via the IME RMS – which you can view by reaching out to one of our relationship managers (using either the live chat or book appointment feature on this site).

IME View on Abakkus Emerging Opportunities

Type: Mid & Smallcap | GARP | AUM (4883.9 cr) | Inc Date (26 Aug 2020)

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. 

  1. ROE >15%
  2. Earnings Growth >15%
  3. 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 37.8 25.1 40.3
S&P BSE 500 TRI 41.1 18.9 27
Alpha over Broad Mkt BM -3.3 6.2 13.3
Nifty Midcap 150 49.2 26.9
Alpha over Category BM -11.4 -1.8

Performance as of: 31-Aug-24 | Inception Date: 26-Aug-20

Fund Managers

Sunil Singhania | 5-star rated FM

Founder | 30 yrs Experience | 7 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 | 24 yrs Experience | 6 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.

Fee Structure

Fee StructureFee
Fixed Fee Structure2.5
Variable Fee Structures1.75% fixed + 15% above 9% hurdle
Exit Fees1yr(1.5%)

AMC

AMC: Abakkus PMS (click link for detailed AMC review)

Strong FM-Founded AMC and Team: While Abakkus is still a relatively young AMC, it has a number of things going for it - it's founder Sunil Singhania is an industry vetran (ex-CIO of Nippon MF), they have a very clearly defined investment philosophy and performance of their funds have been strong since inception. This accordingly leads to a strong 5-star rating for what is yet a relatiely younger firm.

AMC Rating

5 of 5 stars

AMC Pedigree

5 of 5 stars

AMC Size

5 of 5 stars

Team Pedigree

5 of 5 stars

Inv Philosophy

5 of 5 stars

Performance

4 of 5 stars

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