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O3 Securities Core Value Regular

Scheme Rating

IME Scheme Rating

3 of 5 stars

Can Consider for Investment: As it follows a value investment approach in high-quality businesses. The strategy is reasonably well defined and there also does appear to be a reasonable level of strategy adherence. This is the diversified option of their Value Strategy.

IME Strategy Rating

4 of 5 stars

Flexi Cap Approach: The Strategy builds a flexi-cap portfolio of 20-25 stocks, emphasizing 75% allocation to attractive valuations, characterized by factors such as temporary distress, historical valuation lows, and a valuation less than future earnings growth, ensuring a prudent investment approach. A flexi-cap strategy follows a value investment approach in high-quality business.

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 O3 Securities Core Value Regular

Type: Flexi Cap | Value | AUM (674.1 cr) | Inc Date (14 May 2019)

O3 Securities Core Value Strategy Regular Option- Investment Strategy

Focus on Market cap and benchmark agnostic

O3 Regular Option is a multi-cap strategy. Market cap and benchmark agnostic. Focus on competitive position, measurable quality parameters, and entry price of the stock.

Investment Philosophy 

  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

Trailing Performance

1yr 3yr 5yr Since Inception
O3 Securities Core Value Regular 39 22.3 19.1
S&P BSE 500 TRI 39.5 19.5 19.3
Alpha over Broad Mkt BM -0.5 2.8 -0.2
Nifty 500 38.4 18.1
Alpha over Category BM 0.6 4.2

Performance as of: 28-Feb-23 | Inception Date: 14-May-19

Fund Managers

E. A. Sundaram | 4-star rated FM

ED & CIO, Public Markets | 35 yrs Experience | 5 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.

Fee Structure

Fee StructureFee
Fixed Fee Structure2.5
Variable Fee Structures2% fixed + 15% on positive alpha over benchmark + NSE500 hurdle
Exit Fees

AMC

AMC: O3 Securities PMS (click link for detailed AMC review)

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.

AMC Rating

3 of 5 stars

AMC Pedigree

2 of 5 stars

AMC Size

3 of 5 stars

Team Pedigree

3 of 5 stars

Inv Philosophy

3 of 5 stars

Performance

2 of 5 stars

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