SageOne Small And Micro Cap Portfolio

The objective of SageOne Investment Managers is to build and maintain a portfolio in high conviction growth ideas available at prices at or below fair value.

The objective of SageOne Small and Micro Cap Portfolio is to outperform the benchmark indices by at least 5% (annualized) over an economic cycle.

SageOne PMS targets this objective by looking at high growth businesses with a long-term competitive advantage that have a clean and competent management, sustainable competitive advantage.

Proven Track Record

• Maximising risk-adjusted returns for Alpha generation
• Consistent track record of identifying multibaggers
• Timely exits

Experienced Investment Team

• 70+ cumulative years of relationships across industries and supply chains verifications
• Understanding of emerging economic trends, businesses and their competitiveness
• Strong network enabling robust ground checks

Robust Investment Process

• Bottom-up research
• Scientific screening process for filtering right stocks & sectors
• Quantitative & qualitative thorough research

Disciplined Risk Management

• Focus on downside volatility
• Holistic checks on macro and micro factors that affect operations of the businesses
• Detailed Analysis of Company Fundamentals

SageOne Portfolio approach looks for niche business leaders who are expected to grow earnings > 20% (CAGR) over the investment horizon of 3-5 years driven by industry growth and market share gain from competition and especially do significantly better than the competition during stressed environment.

The primary focus of SageOne Small & Micro Cap PMS is on superior businesses and would not buy a weak business. SageOne Small & Micro Cap PMS portfolio looks to invest in businesses that have a sustainable competitive advantage, i.e. ROCE and ROE of at least 20% that has been achieved without much leverage.

SageOne follows a “zero” tolerance policy, believes, “if we avoid the losers, the winners will take care of themselves.”

SageOne Small & Micro Cap (SSP) PMS is portfolio construction of 12 to 20 companies from 400th to 1200th company as per market cap.

SageOne Small Cap Portfolio (SSP) PMS follows a bottom-up approach and are not sector agnostic, which means they carefully select companies based on their individual merits rather than investing broadly across sectors. To manage risk, they have a cap on exposure per sector, aiming to avoid overconcentration.

Sage One Small Cap PMS or SSP is focused on capturing the upside potential while also aiming to protect against downside risks. They have a three-year view on investments but are not hesitant to make adjustments in their holdings if the performance does not align with their growth story, even if it’s within a few months or quarters.

Interestingly, the fund management team at SageOne Investment Advisors prefers not to regularly engage with promoters as it could introduce bias in their decision-making process. Instead, they maintain communication with other stakeholders such as suppliers and clients to gain a broader perspective on the companies they invest in.

When it comes to performance, SSP closely tracks the index on the downside, aiming to limit losses. However, they aim to generate alpha on the upside by selecting portfolio companies based on strong earnings and valuation multiples, aiming to identify promising small-cap companies with growth potential while managing risk effectively.

Sage One believes in an in-depth, fundamental bottom-up research into companies and emerging trends; to identify and invest in companies with long-term structural growth, high profitability & quality management.

Green Flags

• 20% + compounded earnings growth
• Market share gains
• ROCE & ROE > 20%
• High Cash Flow from Operations
• Sustainable margins
• Low leverage
• Better ROCE on incremental capital expenditure
• Favorable ESG incorporation

Prudent Stock Selection

• Financial & Business Analysis
• Internal Forensic Model

Sectoral & Stock Limits

• Maximum 25% exposure to one sector
• Maximum 20% exposure to one business group

Timely Rebalancing

• Strengthen winners, cut out losers
• Active calls on portfolio liquidity levels

Active Monitoring

• Channel checks across portfolio companies & competition
• Active entry & exit, based on valuations & business dynamics

• In 2023, Sage One Small Cap Portfolio (SSP) was awarded Rank #1 as the Best PMS in the Mid & Small Cap Category, on a 3Y Risk-Adjusted Returns. These Awards were hosted by PMS AIF WORLD, in association with IIM-Ahmedabad.

• In 2022, Sage One Core Portfolio (SCP) was awarded Rank #1 as the Best PMS in the Mid & Small Cap Category, on a 3Y Risk-Adjusted Returns. These Awards were hosted by PMS AIF WORLD, in association with IIM-Ahmedabad.

• In 2022, Sage One Small & Micro Cap Portfolio was awarded the Winner in the Best PMS in the Mid & Small Cap Category, on a 2Y Risk-Adjusted Returns. These Awards were hosted by PMS AIF WORLD, in association with IIM-Ahmedabad.

• In 2021, Sage One Core Portfolio (SCP) was awarded Rank #3 as the Best PMS in the Mid & Small Cap Category, on a 3Y Risk-Adjusted Returns. These Awards were hosted by PMS AIF WORLD, in association with IIM-Ahmedabad.

• In 2021, Sage One Small Cap Portfolio (SSP) was awarded the winner in the Best Newcomer PMS Category, on 1Y of Absolute Returns. These Awards were hosted by PMS AIF WORLD, in association with IIM-Ahmedabad.