Introduction

Excalibre Capital is a Portfolio Management Advisory committed to the ‘Graham-Buffett Style’ of ‘Value-oriented Investing’.

Excalibre Capital advocates the concept of ‘Generational Wealth Creation and Preservation’, which is rooted in the steadfast belief that Creating and Preserving Wealth through the Process of Investing is a ‘Life-long Journey’ with ‘Investing Time Horizon’ of ‘Eternity’, guided by ‘Sound Investing Philosophy’ and rooted in ‘Robust Investing Practice’.

Excalibre Capital’s Core Investing Philosophy & Practice are built on the fundamentals of ‘Intrinsic Value’ and ‘Margin of Safety’.

Excalibre Capital seeks Optimization of the Return on its Members’ Invested Capital through an optimal balance between the twin objectives of:
1. Maximization of ‘Capital Deployment Potential’
2. Optimization of ‘Capital Allocation Efficiency’

Portfolio Structure

Portfolio Asset Classes

Active:

Equities-only Portfolio of Listed Equity Securities of Indian companies.
Excalibre Capital does NOT invest in any other asset class, except for equity securities of publicly traded companies listed in India.

Passive:

Debt Securities for Cash Management only
1. Excalibre Capital uses Debt Securities to deploy Residual Cash Balance.
2. Excalibre Capital uses Financial Derivatives for Hedging purposes only.

Portfolio Characteristics

Benchmark Portfolio:

S&P CNX NIFTY 50 Index (Free Float adjusted Market Capitalization weighted Price Index)

Scope of Operation:

Portfolio of Equity Securities of Publicly-traded Companies listed on Stock Exchanges in India.

Investment Limits:

Minimum Portfolio Investment: Rs. 5 Lac (and further in step-size of Rs. 1 Lac)
Minimum Investment Lock-in: 3 years (subject to early redemption penalty)

Leverage:

Up to a Debt-to-Equity of 1 : 1.
Additionally, Excalibre Capital may use Market-enabled Mechanisms (such as SLBS) for Borrowing or Lending of Equity Securities in its Portfolio to generate additional Return on Deployed Capital.

Investing Time Horizon:

Excalibre Capital advocates the philosophy of Generational Wealth Creation & Preservation which manifests in its ideal Investing Time Horizon of ‘Eternity’.

Excalibre Capital practices the ‘Buy and Hold’ approach, NOT the ‘Buy and Sell’ approach.

Excalibre Capital shall SELL only in case of the following:
1. Redemption Requirements
2. Re-valuation of Intrinsic Value with substantially negative Margin of Safety
3. Re-deployment in case of substantial arbitrage opportunity in Capital Allocation Efficiency

Portfolio Construction & Management

Portfolio Construction: Strategic (Baseline) Asset Allocation

Security Selection based on Buffett-Munger 4-step Security Selection Approach to select Businesses that are:

1. within the ‘Circle of Competence’ (Comprehensibility of Business over the foreseeable future)

2. with an inherent Economic ‘Moat’ (Sustainable Competitive Advantage)

3. with Ethical Corporate Governance (3 I’s Test: Integrity, Intelligence, Initiative)

(First three steps are qualitative filters.)

4. available at Sensible Price with reasonable ‘Margin of Safety’ (Value-add Potential = Intrinsic Value – Market Price)

(Fourth & Last step is a critical quantitative Valuation step.)

Portfolio Management: Tactical Asset Allocation Overlay

1. Buy-on-Margin
2. Sell-on-Margin
3. Hedged Derivatives

Portfolio Re-balancing

Liquidity Management during Capital Flows – Contributions & Redemptions

Portfolio Risk Management

1. Portfolio Diversification across Market Capitalizations, Industry Sectors, Business Geographies

2. Portfolio Hedging through passive use of Financial Derivatives such Stock & Index Futures & Options

Portfolio Construction Summary