KOCHI: It’s never too late to start a business. And even if the company is directly linked to the highly unpredictable stock market fortunes, one could still get a head start if the founders have the passion and conviction in the business model and its investment philosophy.
If early indications are anything to go by, ‘Moat Financial Services’, a Kochibased portfolio management company started in October 2013 by five persons in their late 30s and early 40s, have hit the winning strategy.
Within a year into operations, Moat Financial Services has an assets under management (AUM) of Rs 20 crore, which the firm handles for 60 clients.
“We were not childhood friends or former colleagues. What united us was our common interest in stocks and similar investment philosophy,” explains Suraj Nair, executive director and CIO of Moat.
The founders of the company Binoy J Kattadiyil, Rakhinth Subramanian, Biju John, Naresh Gilda and Nair used to bump into each other at annual general meetings (AGMs) of companies at various cities in the country. Murali Krishna would join the company soon.
“All of us have been in the financial services industry for over 10 years. We exchanged notes at the AGMs. We were also successful in our individual investments. This encouraged us to seriously think about starting our own portfolio management company,” says Nair.
Investment guru Warren Buffet’s famous investment theory of ‘economic moat’ - which refers to a business’ ability to maintain competitive advantages over its competitors to protect its longterm profits and market share - was the inspiration behind naming the firm.
“Our investment philosophy is to own successful businesses,” says Subramanian, who is the ED and CEO.
Under the rules stipulated by the Securities and Exchange Board of India (Sebi), the minimum ticket size for an investment in a PMS is Rs 25 lakh. Nair says several investors have put in a much bigger investment in the PMS.
How do they pick up stocks or take ownership in successful businesses? “We always keep our eyes and ears open to find the right business to own,” says Nair. An example he cited was how a parent insisted on buying ‘Maggi’ noodles at a supermarket though the kids wanted to buy some Chinese noodles instead just to get a complementary sticker of their favourite cartoon character.
“We realised that people prefer brand ‘Maggi’ over others while buying noodles; Milkmaid over other sweet condensed milk and ‘Kitkat’ over other chocolates. This prompted us to buy the ‘Nestle’ stock. We don’t buy the stock. We take shared ownership in that business,” says Nair.
Similarly, the portfolio management company is bullish on Page Industries, the makers of ‘Jockey’ innerwear, Pidilite, the maker of ‘Fevicol’ brand Pidilite, and car parts maker Bosch.
Surely, the investments are paying off. For the period ended on March 31, 2014, Moat Financial Services registered 57 per cent returns as compared to 28 per cent by Sensex in the same period.