We believe that scale is not a driver but an outcome of excellence in our work. Our thematic investment styles are designed around niche investment opportunities that exist in the Indian capital markets. Usually, such specialties offer limited scope for scale-up in terms of the capital we can deploy effectively. The focus is always upon discovering and taking advantage of an insight that can provide the edge, and then adding layers of research and due diligence to construct a portfolio. The common foundation of knowledge, work culture and networks underpin all our investment approaches, providing us the benefit of scale.
Unifi is essentially a value investor in growth businesses. We place ‘Value’ first but also always demand growth potential in a business we own. We believe that stock performance, particularly in mid and small firms, needs a catalyst; and often the best catalyst is an attractive price combined with growth.
To us, both micro (firm level) and macro risks are critical in determining outcomes. We carefully evaluate the fundamentals of each business that we own and, in addition, ask ourselves if the prevailing and expected conditions in the economy will act for or against our interest. At times, while making longer term investments, we consciously trade off adverse macro conditions for terrific entry valuations.
Defining what Value, Risk and Consistency in returns mean to us.
Value investing is easy to understand but hard to practice. Our job is to buy something for less than it is at least worth and generally hold on (for years) till we can sell at a price above its fair value.
Risk is typically measured by the volatility of returns generated by an asset. While this makes great sense, we include another dimension to it, and believe that the greatest risk emanates from the probability of an asset’s permanent diminution of value i.e. loss of invested capital. While earning superior returns relative to benchmark is important, it is far more important to earn superior returns on each unit of risk that we are exposed to.
Consistency of returns relative to our initial objective (in certain approaches we allow ourselves considerable latitude to deviate in order to outperform eventually) as well as the benchmark is an important measure of performance. We aim to consistently generate top quartile performance.
Our People. The bedrock of our firm’s ethos is best represented by our commitment to accountability and continuity, both internal and external. We attract people who are passionate and give them time and opportunity to succeed. We maintain a tight code of conduct and have zero tolerance for poor integrity or quality.
Adhere to the clients’ mandate. Typically, our clients are smart and successful individuals. The most important investment decision is the one made by our client, with our RM’s careful advice at the outset in choosing the asset class and the risk level. As his investment manager, Unifi is committed to stick diligently to the client’s mandate and deliver the best possible outcome while remaining vigilant on the underlying risks.