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Solidarity Prudence

Scheme Rating

IME Scheme Rating

4 of 5 stars

Can Consider as an Investment Option: Soliadarity’s credibility is built on the FM’s strong Experience in PE.

IME Strategy Rating

4 of 5 stars

Fair Strategy Adherence: Follows a multi-cap strategy of investing in businesses with growth and signs of business improvement (expanding moats, increasing market shares and strong ROEs). PMS approach of investing in compounding stories backed by clear fundamental parameters. FM’s experience in PE goes along with a strategy to follow the PE style.

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 Solidarity Prudence

Type: Flexi Cap | GARP | AUM (1687 cr) | Inc Date (11 May 2016)

Solidarity Prudence- Investment Strategy

Focus on Tailwinds of growth, expanding moat and increasing market share and ROE

Solidarity Prudence is a multi-cap strategy. Prefer to invest in companies with tailwinds of growth, expanding moat, and increasing market share and ROE.

Investment Philosophy 

  • Broadly Predictable Growth: Companies with large addressable markets, and structural industries tailwinds
  • Improving Edge: Favourable industry structure, sector/niche leadership, competitive advantage and ability to deploy capital for growth at ROE >15%
  • Disciplined Management: Focus on few business lines, disciplined capital allocation, prudent use of leverage and learning organisation.

Things that Solidarity does not do

  • Don’t believe in model portfolios: model portfolios imply that current valuations do not matter, so the strategy invests in the best opportunities at present
  • No cash calls based on macro events

Valuations

Sensitive to growth stage of the life cycle. With more mature business growth, the higher the need for valuation sensitivity.

Portfolio Construction

  • Portfolio Allocation: 40-50% in ‘Clear Leaders’, 40-50% in ‘Emerging Leaders’, and ~10% in ‘Special Situations’.
    • Clear Leaders (15-18% IRR Ask): Leaders in a growing market, with dominant share of the profit pool and robust business model & balance sheet.
    • Emerging Leaders (18%+ IRR Ask): on path to becoming leaders, typically in a specific niche
    • Special Situations (25% IRR Ask): good businesses undergoing temporary uncertainty with high price-value divergence.
  • Concentration: 15-20 companies with minimum 3% position size
  • Position sizing: may vary between 3-15%
  • Risk Management: Avoid poor governance and excess leverage. Volatility is not risk.
  • Sell: 1) euphoria in valuations and/or 2) new facts change the view

Themes that interest the team

  1. Opportunity to gain market share in global supply chains: Manufacturing/Services 
  2. Private sector Banks who will gain market share 
  3. Life Insurance: trusted brands, strong distribution
  4. General Insurance with preference for adoption of health insurance 
  5. Digital Business Models and enablers of Digital 
  6. Mitigation of inequality 
  7. Discretionary consumption-“Affordable luxury”
  8. Financialisation of Savings 
  9. Formalization of the economy 
  10. Thrust on clean energy 

 

Trailing Performance

1yr 3yr 5yr Since Inception
Solidarity Prudence 22.8 12.4 21.3 18
S&P BSE 500 TRI 39.5 19.5 19 16.8
Alpha over Broad Mkt BM -16.7 -7.1 2.3 1.2
Nifty 500 38.4 18.1 17.5
Alpha over Category BM -15.6 -5.7 3.8

Performance as of: 28-Feb-23 | Inception Date: 11-May-16

Fund Managers

Manish Gupta | 4-star rated FM

Founder & CIO | 27 yrs Experience | 10 yrs at current firm

Past Experience: RARE Enterprises (MD-Private Equity), Honeywell (Director-Strategy), BCG (Strategy Consultant)

Prior to founding Solidarity in 2014, Manish worked with Rakesh Jhunjhunwala for 8 years as the Managing Director for Private Equity Investments at Rare Enterprises. His prior experience includes 7 years of strategy consulting with the Boston Consulting Group.

Fee Structure

Fee StructureFee
Fixed Fee Structure2
Variable Fee Structures1% fixed + 20% above 12% hurdle
Exit Fees

AMC

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

Highly recommended for aggressive investors looking for Multi Cap strategies with PE Style Approach: Investing in Solidarity PMS is essentially investing with Manish Gupta and taking a call on his ability to leverage his substantial experience in corporate strategy & private equity to deliver outperformance while managing listed equities. The premise is interesting, but we would ideally like to wait a few more years to analyse performance across market cycles.

AMC Rating

4 of 5 stars

AMC Pedigree

3 of 5 stars

AMC Size

4 of 5 stars

Team Pedigree

4 of 5 stars

Inv Philosophy

4 of 5 stars

Performance

4 of 5 stars

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