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Marcellus Rising Giants

Scheme Rating

IME Scheme Rating

3 of 5 stars

Wait for performance to improve (closed for subs): Marcellus Rising Giants is currently closed for subscriptions. We would anyways wait for performance to improve prior to recommedning this scheme.

IME Strategy Rating

4 of 5 stars

Concentrated Mid-Cap Strategy: It a concentrated (20-30 stocks) mid-cap strategy is a high-risk-reward strategy, but also one that is clearly differentiated. Marcellus’s strong focus on clean accounting, corporate governance, capital allocation, and barriers to entry help mitigate many of the normal risks while investing in mid-caps, which makes this an interesting investment option for investors willing to take on a higher level of risk.

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 Marcellus Rising Giants

Type: Mid & Smallcap | High-quality | AUM (288.7 cr) | Inc Date (27 December 2021)

Investment Philosophy

Marcellus ‘Rising Giants’ is a mid-cap focussed concentrated strategy. The strategy defines mid-cap as typically less than INR 7500Cr market-capitalisation, predominantly in the INR 700 to 7500 range.

Key Aspects of the Philosophy

  • Clean accounting
  • Companies with a track record of superior capital allocation
  • Companies that pass both those filters, identify those with high barriers to entry

Investment Process

Rigorous process to filter out based on 1) forensic accounts, 2) sustainability parameters, 3) bottom-up research, channel checks, and management meetings to invest in 12-15 high-quality companies.

  • Forensic Accounting: Avoid companies with poor corporate governance. About 40% of the starting 500 company universe get eliminated here.
  • Sustainability Parameters: Using defined threshold on revenue growth, and ROCE. Identify cash-generating growing franchises. Around 50% get further eliminated at this step.
  • Bottom-up research: research on only 10% of the universe. Detailed analysis of secondary resources along with channel checks, independent views and management meetings.

Sell Framework

Sell decisions are based on 2 factors i.e lower than expected free cash flow growth and uncertainty around ‘longevity score’ due to a slowdown in growth, weakness in moat and legacy.

  • Free Cash Flow Growth: Weakening competitive positioning impacting slower growth
  • Moat Score: Weakening franchise’s strength visible in pricing power
  • Weakening Lethargy Score and Succession Planning

Trailing Performance

1yr 3yr 5yr Since Inception
Marcellus Rising Giants 15.4 -1.8
S&P BSE 500 TRI 38.3 2
Alpha over Broad Mkt BM -22.9 -3.8
Nifty Midcap 150 55.4
Alpha over Category BM -40

Performance as of: 30-Jun-24 | Inception Date: 27-Dec-21

Fund Managers

Saurabh Mukherjea | 5-star rated FM

Founder & CIO | 27 yrs Experience | 6 yrs at current firm

Past Experience: Ambit Capital (CEO), Noble (Head of India Equities), Accenture (Consultant), London Economics (Consultant)

Saurabh comes with a very strong investments background, having helped build Ambit’s broking, wealth & investment management businesses as CEO. He was also responsible for building Execution Nobles India broking business (which was sold to Ambit) and having set up and sold Clear Capital (a UK based small cap research fund). Saurabh is a strong believer in investing in the long-term in very high quality clean businesses and has written a number of books including Gurus of Chaos, The Unusual Billionaires and Coffee Can Investing.

Ashvin Shetty | 4-star rated FM

Portfolio Manager | 20 yrs Experience | 5 yrs at current firm

Past Experience: Analyst (Ambit), Analyst (Execution Noble), Statutory Auditor (KPMG)

Ashvin Shetty has more than a decade of experience in equity research. Previously, at Ambit, he led the coverage on automobile sector from 2010 to 2017. Ashvin was recognised multiple times for his stock picking abilities. He was ranked in Starmine Analyst Awards 2013 and 2016 as a lead auto analyst. He later moved onto become a senior analyst for Ambit’s Mid and Small cap PMS funds till November 2018. Prior to joining Ambit, he worked with Execution Noble as an analyst covering consumer and media space. He has also worked with KPMG’s and Deloitte’s statutory audit departments from 2004 to 2007 gaining extensive experience across Indian accounting standards and financial statement analysis. Ashvin is a BCom graduate from Narsee Monjee College (Mumbai). He is a qualified Chartered Accountant (ICAI India) and Chartered Financial Analyst (CFA Institute, USA).

Fee Structure

Fee StructureFee
Fixed Fee Structure2.5
Variable Fee Structures1.75 + 10% Above 6% + benchmark
Exit FeesNil

AMC

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

Not a top recommendation (at this time) due to weak recent performance: Built on the strong foundation of a strong founding team and a tightly defined and time-tested investment philosophy, Marcellus is a good option for investors seeking to invest only in the highest quality companies. However, the lack of flexibility in Marcellus's investment approach, makes it difficult for their strategies to perform across market conditions. The lower-rating for a pedigreed investment team, with a strong investment philosophy, is primarily driven by the weak recent performance & relatively lower flexibility for Marcellus to reposition portfolios in changing market environments.

AMC Rating

3 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

2 of 5 stars

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