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    An Update - Old Bridge Capital

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    Ashwin Hasyagar
    The portfolio has performed well over the past 5 years, outperforming various indices with a return of 20.4% since inception compared to 15.3% for the S&P BSE 500. Looking forward, the strategy will continue focusing on underinvested areas experiencing supply constraints such as manufacturing, commodities, utilities and urban consumption. Key sectors include energy, external facing businesses, agri-facing companies and water/waste management.

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    An Update - Old Bridge Capital

    Uploaded by

    Ashwin Hasyagar
    38 views3 pages
    The portfolio has performed well over the past 5 years, outperforming various indices with a return of 20.4% since inception compared to 15.3% for the S&P BSE 500. Looking forward, the strategy will continue focusing on underinvested areas experiencing supply constraints such as manufacturing, commodities, utilities and urban consumption. Key sectors include energy, external facing businesses, agri-facing companies and water/waste management.

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    An Update_Old Bridge Capital

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    The portfolio has performed well over the past 5 years, outperforming various indices with a return of 20.4% since inception compared to 15.3% for the S&P BSE 500. Looking forward, the strategy will continue focusing on underinvested areas experiencing supply constraints such as manufacturing, commodities, utilities and urban consumption. Key sectors include energy, external facing businesses, agri-facing companies and water/waste management.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    38 views3 pages

    An Update - Old Bridge Capital

    Uploaded by

    Ashwin Hasyagar
    The portfolio has performed well over the past 5 years, outperforming various indices with a return of 20.4% since inception compared to 15.3% for the S&P BSE 500. Looking forward, the strategy will continue focusing on underinvested areas experiencing supply constraints such as manufacturing, commodities, utilities and urban consumption. Key sectors include energy, external facing businesses, agri-facing companies and water/waste management.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 3

    The Future &

    The Past
    the

    Private & Confidential (only for private circulation)


    This is an out of turn update on the Old Bridge Capital Portfolios. We have completed 5 years. This is what the 5 year performance looks
    like:

    Calendar Returns (%)

    2017 2018 2019 2020 2021* Since Inception^

    Old Bridge Strategy# 54.3 -14.2 -6.2 29.7 56.9 20.4


    S&P BSE 500 India 35.9 -3.1 7.8 16.8 30.8 15.3
    CNX Midcap 47.3 -15.4 -4.3 21.9 45.8 14.4
    CNX Nifty Index 28.7 3.2 12.0 14.9 26.0 15.1
    BSE Small Cap 59.6 -23.5 -6.8 32.1 55.2 17.0

    * C.Y. Data from Jan 1, 2021 to Sep 30, 2021


    ^Annualized Returns Since Inception- Aug 30, 2016 to Sep 30, 2021
    # Old Bridge Strategy- Our strategy across All Cap, NRI Vantage, Long Term Equity & Advisory Portfolios

    We have upfronted the table to the note because it has been reasonably important for us to have come through knowing that we have
    been anti consensus through the journey. Our stock selection is just about started to being noticed and finding places in a lot of broad-
    based portfolios and strategies. If this is in continuation then we will have a lot to talk about in the next 5 years.

    The Future and the Past

    At the onset of the pandemic, little did we estimate our world would change this dramatically. The entire world is now refocussing on
    supply, from electricity to commodities and everything in between. For us in the financial world, I never imagined the conversation on
    valuation would veer down to Price/Sales, in absence of any profits or even meaningful sales numbers. Then it dawned on me that very
    few of the new market participants experienced the pain of the Tech meltdown, when valuations went berserk on the upside and
    couldn’t handle the negativism that followed. As preposterous as it may sound right now, everyone seems to have the visibility of the
    next ten years, but no one saw the changes in the last two.

    Our conclusion has also been, be wary of places where there is overinvestment and look for underinvestment, sooner than later demand
    will outstrip supply. In the last 30 years of being an analyst this single macro has played out countless times before.

    We definitely don’t claim to have the foresight and neither can we predict growth or demand, but we can definitely identify supply
    crunches. And that has been our story of the last five years. We side stepped every crowded environment, Consumers, Private Banks,
    Consumer Tech – and did some traditional investing in Fertilizers, Commodities, Manufacturing. Some of this played through in the
    initial years, a lot of them came through in the last 18 months. The pandemic in some sense changed the course of what did well and
    probably of what will do well.

    If next five years nothing changes from our investment style. We continue to look at companies and industries going through a
    downcycle, anchor ourselves to the largest businesses and wait for the environment to change. In this way, we will get stocks in a right
    pricing environment.

    Looking back, we also skirted a number of controversies, with names that didn’t make it. We’d obviously never get all of this right, but at
    that moment they seemed logical fits within the portfolio. We rectified most of them on the way, and remain patient with a few, which
    have not been big drivers to portfolio returns. We have seen market dominance and a great balance sheet transition to large market
    capitalisation over long term periods.

    So, in the future for us it is all cash flows and low leverage at a price. That is what we did with a majority of our portfolio companies in
    the past. Portfolios will also look polarised at most times in not the favourite part of the market, and when we say long term, we like to
    hold a business into perpetuity unless the valuations look silly or the characteristic of the market share changes dramatically. Any
    business that earns less than its cost of capital (includes loss making franchisees) can’t survive in the long term, it is not economically a
    rational way to build an organisation, irrespective of how large the opportunity would be.

    We broke our quarterly sequence of communication to write this update, to bring you up to speed with where we are with the portfolio.
    Category leaders, cash flow positive businesses, low leverage with a lot of the names at the bottom of their industry cycle are things we
    understand and are part of the portfolio. If this business cycle is in continuance, profit growth can trend at a higher level for at least the
    next couple of years.

    Private & Confidential (only for private circulation)


    Our Portfolios

    Our choice of stocks remains unchanged. Manufacturing, external facing businesses, commodities, utilities and urban consumption
    which includes real estate will be our main stays. What we still do not have a presence in is lending businesses and the broader
    consumption plays. Our assumption of this segment having moderate growth still holds.

    Energy Related External Facing Business/ Manufacturing +


    Commodities
    ▪ Indian Energy Exchange ▪ Tata Steel ▪ Hindalco
    ▪ Gujarat State Petronet ▪ Aurobindo Pharma ▪ UPL
    ▪ ABB Power Products ▪ HCL ▪ RK Forging
    ▪ Redington ▪ AIA Engineering

    Digitization Urban Consumption Agri Facing Business

    ▪ Tanla ▪ Sobha ▪ Coromandel


    ▪ Indiamart ▪ Brigade ▪ Chambal Fertilizers
    ▪ Barbeque Nations ▪ Kaveri Seeds

    Water/Waste Management

    ▪ Antony Waste
    ▪ VA Tech

    Release Date of the Document: October 5, 2021


    Disclaimer
    This document is strictly for information and illustrative purposes only and should not be considered to be an offer, or solicitation of an offer, to buy or sell any securities or
    funds or to enter into any portfolio agreements. It is prepared by OBCM strictly for the specified audience and is not intended for distribution to public and is not to be
    disseminated or circulated to any other party outside of the intended purpose. This document may contain confidential or proprietary information and no part of this document
    may be reproduced in any form without its prior written consent to OBCM. If you receive a copy of this document and you are not the intended recipient, you should destroy
    this document immediately. Any dissemination, copying or circulation of this communication in any form is strictly prohibited. In preparing this document, OBCM has relied
    upon and assumed, without independent verification, the accuracy and completeness of information available from public sources. Accordingly, neither OBCM nor any of its
    shareholders, directors, employees, agents or advisors shall be liable for any loss or damage (direct or indirect) suffered as a result of reliance upon any statements contained
    in, or any omission from this document and any such liability is expressly disclaimed.
    Private & Confidential- All rights reserved. No part of this publication may be reproduced or utilised in any form or by any means, electronic or mechanical, including
    photocopying, recording or by any information storage and retrieval system, without prior permission in writing from Old Bridge Capital.

    Private & Confidential (only for private circulation)

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