Why Moats?

  • The presence of a moat signifies strong entry barriers which could arise from one or more sources such as brands, patents, copyrights, network effects, high customer switching costs,  low cost advantages stemming from scale, location, or access to a unique asset, corporate longevity, or a unique corporate culture.
  • Such entry barriers make life difficult for current and potential competitors enabling existing industry players to earn superior returns on capital over very long durations (“competitive advantaged period” or “CAP”).
  • Businesses with long duration CAPs are worth much more than businesses without CAPs, particularly in a growing economy like India which allows many great businesses with opportunities to re-invest internally generated funds at high incremental rates of return.

 

What Differentiates Us?

  • Our exclusive focus on moats implies a very high rejection rate — industries and companies we would reject for even defining our “opportunity landscape” either because those businesses:
    • Do not possess an enduring moat;
    • Are not scalable; or
    • Are run by managers having a poor track record in capital allocation or corporate governance.
  • No index tracking: We do not mimic any index. We believe that in order to do better than the market, we have to do things differently.
  • Our very long term investment horizon and extremely low portfolio turnover differentiates us from the typical institutional investor.