At Atyant Capital, we strive to achieve maximum asymmetry in our investment portfolios. Our philosophy is focused on seeking out India value investing opportunities that offer meaningful downside protection in addition to significant upside worth. Unlike a traditional hedge fund investment, it is not enough for an investment to be considered “cheap” for our strategy.
We are not classified as either value investors or growth investors. Rather, our investment philosophy is a hybrid of the two, which allows us to outperform traditional hedge funds. We have learned as much from Charlie Munger and Phil Fisher as we have from Warren Buffett and Ben Graham. We follow Charlie Munger's advice that it is better to buy a good business at a fair price than to buy a fair business at a good price. However, as India value investing specialists, we have come to realize that the attributes that make a business good or even great in a market like India are sometimes very different from those that make a business good in developed markets. In the footsteps of Warren Buffett and Joel Greenblatt, we also actively invest in special and complex situations that are often misunderstood by the markets.
In public markets, we believe in taking advantage of the manic depressive nature of Mr. Market and therefore we can be considered contrarian investors.
While we certainly look to buy businesses that have strong and durable moats, enduring franchises, and that generate high returns on capital, we first look to buy good management teams. In our experience, especially in markets like India, great franchises are sometimes run by sub-par management teams and promoters. Our India value investing process focuses, above all else, on Corporate Governance and Capital Allocation.
A company with good corporate governance we consider to be one where the promoters and management teams treat minority shareholders fairly and as equal partners and do not try to take advantage of them through loopholes in the law.
A company with good capital allocation we define as one where the primary goal of the promoters and management team is to maximize returns on reinvested (retained earnings) capital. It takes tremendous discipline for management to return capital to shareholders and shrink the sizes of their companies when insufficient opportunities are available. Most management teams are empire builders and are on a quest for "growth" at any cost.