Karma Capital Advisors Private Limited
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An independent investment management organization focused on the Indian listed equity markets A platform for like minded team members and clients who believe in investing with an absolute return mindset and a Value - oriented investment philosophy 3
INDEX KARMA CAPITAL: OVERVIEW WHY KARMA CAPITAL INVESTMENT PHILOSOPHY INVESTMENT APPROACH INVESTMENT PROCESS PORTFOLIO CONSTRUCTION RISK MANAGEMENT THE FOUNDING TEAM 5 6 7 8 9 11 12 13 4
Karma Capital - Overview Founded in 2005, as an investment management and advisory organization. The two Principals of Karma Capital have experience of over two decades each in the fund management business across three market cycles. They have also been a part of two successful start-ups as founding team members. Karma Capital is Investment advisor to Offshore India funds managing investments for large global institutions. Team of 11 people having experience across key areas of the business, with 5 people in investment. Karma Capital is registered with and regulated by The Securities and Exchange Board of India (SEBI). 5
Why Karma Capital Unique and differentiated founding vision A value oriented investment philosophy Investing with an Absolute return mindset Experienced team: Investment team has a combined experience of over 50 years in the investment management industry spanning various money management formats Owner Manager driven: Investing with a medium to long term horizon The Principals are actively involved in managing portfolios ensuring consistency of investment philosophy & style Focus on in-house research Investment Performance as the central focus of our business Most of the research is done in-house with a bottom up stock selection approach. 6
Investment Philosophy Integrity of Investment Approach Focus on long term value creation Value Based Risk Adjusted returns Investment Philosophy Think Independently / At times Contrarian Discipline and Patience are the key to implementing it 7
Investment Approach Margin of Safety Bottom Up Approach Focused In-House Research Substantial Change / catalyst to value unlocking 360 View / Kick the tires approach Active Company Visitation program 8 Typically we are early cycle investors involving lot of ground up research
Investment Process 9 Financial Screening Well established broker / analyst research Independent Investor Network Industry & Company contacts Thinking Independently and Consistency of Approach An Experienced Team Company meetings / Conference Calls Stock Tracking Universe Developments to be tracked Qualitative & Quantitative Analysis Investment Argument Discussion with Investment Team INVESTMENT A clearly defined research universe based on experience of knowing these companies over a long time horizon
Automobiles & Capital Goods Consumer Durable & Consumer Services Consumer Staples Energy Financials Healthcare Information Materials Media Metals Real Estate Retail Telecom Transportation Utility MCap US$bn Karma Universe 35 30 25 20 15 10 5 0 13 24 8 8 21 5 5 2 8 6 10 18 5 9 7 4 20 9 6 2 3 1 2 3 1 12 3 6 Mcap as on Dec 31 2013, Sector classification as per GICS Large Cap Mid Cap Large Cap (Mcap>US$1.5bn) - 87 Mid Cap (MCap <US$1.5bn) - 107 Total - 194 Indian markets provide unique breadth with companies across wide range of sectors and market caps. Our research sweet spot is in the market cap range of US$500 mn. to US$ 2 bn. 10
Portfolio Construction A concentrated portfolio of approximately 20 stocks Average holding period of 2 to 3 years. Market-cap & sector agnostic Scaling & sizing the positions appropriately reflect our views on various ideas. Portfolio composition is an important part of overall Risk Management to control concentration risk as well as underlying volatility in the businesses owned. Low portfolio turnover 11
Risk Management Managing risk is a key challenge in a volatile environment. Managing risk in Indian markets effectively requires not only quantitative analysis but also an understanding of softer qualitative issues. Qualitative risk: Nature of the underlying business, Quality of corporate governance and Ability of management to manage business risks (their track record). Our long experience is an advantage in assessing these qualitative aspects. 12 Risk Control Sector limit: 30% Stock limit: 10% Monitor liquidity, turnover and number of new stock ideas in the portfolio Risk increases with Lack of Discipline Momentum or consensus heavy investment approach Rationalizing prior decisions Volatility, a common measure of risk is an opportunity in our view
The Founding Team NIKHIL DESAI Nikhil Desai is the Co-founder Director at Karma Capital Advisors. He has over two decades of experience in the Investment Management business spanning several economic and market cycles. For the past 15 years at various organizations, Mr. Desai has been primarily responsible for managing discretionary equity portfolios and formulating and implementing investment strategies. Prior to founding Karma Capital, Mr. Desai worked in various capacities at ABN AMRO Bank s Private Banking Division and ASK Raymond James Securities. Mr. Desai received an MBA from Virgina Tech, USA where his academic achievement was recognized with membership to honor societies Beta Gamma Sigma and Phi Kappa Phi. He also holds a graduate degree in Commerce from Sydenham College, University of Mumbai RUSHABH SHETH Rushabh Sheth is the Co-founder Director at Karma Capital Advisors with more than two decades of experience in Investment management industry. In his engagements prior to Karma Capital, Mr. Sheth was CIO (Equities) at Kotak Mutual Fund, and Portfolio Manager, Investment Analyst, etc. with ASK Raymond James. At Kotak, he established excellent track record for two of the funds that he managed and they were top performers in their respective categories in 2004-05 and assets for the fund grew from Rs.1.5 Bn to Rs.13 Bn. Mr. Sheth was also involved in setting up the investment management business for ASK Raymond James. Mr. Sheth holds a graduate degree in Commerce from University of Mumbai at Sydenham College of Commerce & Economics and is a qualified Cost Accountant. 13
Thank You 408, Oberoi Chambers I, Off Andheri Link Road, Andheri (West), Mumbai 400 053. Tel: +91-22-2673-0520 Website: www.karmainvest.com Email: marketing@karmainvest.com 14