Alpha (1Y) Beta (1Y) Standard Deviation (1Y) % of +ve Months (SI)
-23.23% 0.71 14.96% 64.34%

Nine Rivers Capital -Aurum Small Cap Opportunities

KEY PORTFOLIO ATTRIBUTES #

Year of Inception 2012-12-31
Number of Stocks
Alpha (1Y) -23.23%
Beta (1Y) 0.71

About Nine Rivers Capital

Nine Rivers Capital is an independent asset management and corporate advisory group focused on high growth businesses from new economy as well as traditional sectors.

Nine Rivers Capital has built a storied history in the realm of private equity investment. In recent times, the firm has transitioned into an independent asset management entity with a specialized focus on small and mid-cap public equities. Their distinctive approach, often likened to the methodologies employed in private equity, has been instrumental in consistently delivering superior returns to clients.

Nine Rivers Capital’s small-cap strategy, introduced in January 2013, and their mid-cap strategy, launched in July 2013, have both enjoyed commendable success. Their investment team, known for its agility and innovative thinking, excels at identifying promising investment themes early on, thus capitalizing on the associated discovery premium. Additionally, the firm has implemented a proprietary ‘Price Guardrail Strategy,’ a risk mitigation tool that has proven highly effective.

Key People

Sandeep Daga MD & CIO

Investment Approach

 

Nine Rivers adhere to a disciplined 360-degree approach to investments that requires us to remain nimble & inventive in our thinking at all times. They endeavour to buy solid businesses that exhibit multi-year structural growth run by good management teams and are available at a significant discount to their intrinsic value.

They generally look for the following attributes in prospective investee companies:

  1. Being a dominant player in a niche vertical
  2. Aided by policy tailwinds / changing consumer dynamics / technology etc
  3. Robust balance sheets – we stay away from fragile balance sheets
  4. Business generates / has the potential to generate high ROE / ROCE
  5. Non / under coverage by ‘sell side’ analysts.

Their proprietary ‘Price Guardrail Strategy’ – key to credible risk mitigation

They have developed a proprietary framework that we deploy to assign an ‘entry price guardrail’ and an ‘exit price guardrail’ to each stock that is approved for investment. They strongly believe that the most effective risk mitigant in small and mid-cap investing is to ‘not overpay’ to buy a stock and therefore we assign the aforesaid guardrails to each stock. They buy a stock as long as it is available within our entry price guardrail and we sell a stock the moment it breaches our exit price guardrail. Their Price guardrail framework has helped us contain excessive volatility and significant drawdown in our portfolio despite the many turbulent events in the market over last few years.

Investment Philosophy

Nine Rivers Capital aims to generate sustainable, long-term wealth for its clients through its focus on investing in high-quality small cap companies supported by robust fundamentals and capable leadership. The company’s tagline, “private equity approach to small cap investing,” reflects Nine Rivers’ commitment to a meticulous, disciplined process and extended investment horizon when identifying potential opportunities.

1. This approach centers on the ability to anticipate long-term structural growth themes and drivers that are anticipated to unfold over a span of five years or more. By adhering to this strategy, Nine Rivers endeavours to capture the benefits of early investment in such themes, distinct from short-term momentum-focused investing strategies.

2. Despite its small cap specialization, Nine Rivers is acutely aware of the inherent risks within this space and takes diligent measures to minimize and mitigate these risks. This is achieved through the implementation of a rigorous “price guard rail” framework, which guides Nine Rivers to acquire stocks at reasonable valuations, deviating from conventional model portfolio approaches.

3. At the individual company level, Nine Rivers seeks to identify entities that exhibit growth potential while maintaining a favorable margin and cash flow profile. An essential criterion is the capacity of the business to generate substantial free cash, which in turn facilitates future growth initiatives. Nine Rivers maintains a cautious stance towards leveraging, avoiding investment in entities with fragile balance sheets.

4. The company holds a strongly bullish outlook on small caps for the forthcoming decade, driven by the macroeconomic prospects in India. These prospects indicate the emergence of a manufacturing renaissance alongside growth in the services sector, contributing to a favorable environment for small cap investments.

Investment Process

 

Based on the key learnings from their private equity legacy, their investment process is a confluence of qualitative and quantitative analysis wherein each of our team members get ample opportunity to do ‘original’ thinking and yet adhere to a prescribed discipline leading to superlative outcomes.

Performance Table #


Trailing Returns (%) 1m return 3m return 6m return 1y return 2y return 3y return 5y return 10y return Since inception return
Nine Rivers capital Aurum Small Cap Oppprtunities0.70%-4.00%11.10%16.60%32.80%24.50%35.70%19.20%28.77%
BSE 500 TRI0.10%-4.40%7.90%27.00%20.00%16.80%19.60%14.00%15.33%

QRC Report Card *




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Portfolio Holdings


Holding %

Sector Allocation


Holding %
IT/Tech 18.00
Auto & Auto Ancilliary 16.50
Consumer Discretionary 16.30
Industrials 8.50
Realty & Building Products 7.30
Aerospace & Defence 6.80
Chemicals 6.60
Others 9.10
BFSI 2.40
Healthcare & Pharma 2.00
IT/Tech 18.00
Auto & Auto Ancilliary 16.50
Consumer Discretionary 16.30
Industrials 8.50
Realty & Building Products 7.30
Aerospace & Defence 6.80
Chemicals 6.60
Others 9.10

Market Cap Allocation


Allocations %
Large Cap
Mid Cap
Small Cap 93.50
Cash 6.50

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Disclaimer

#Returns as of 30 Nov 2024. Returns up to 1 Year are absolute, above 1 Year are CAGR.

*QRC Report Card data is updated quarterly. Current data is as of Oct 24.


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