Arcstone Capital invests in a diversified portfolio of Indian companies, with a long-term investment horizon of approximately three years. Our portfolio is value-sensitive, concentrated in 15-25 companies, and has low turnover.
At the heart of our investment philosophy is the relationship between the investor deploying capital, the small to mid sized Indian companies requiring capital to grow, and Arcstone Capital, the investment manager working diligently to deploy our investors’ capital in growing businesses. We firmly believe this relationship is the key ingredient to long-term wealth creation for each of our partners.
We work relentlessly to discover under-followed companies that address large markets and are led by visionary, hard-working owner-managers. These companies are modestly valued because the market is either unaware of the company, unable to invest because of the company’s size, or unconscious of a catalyst for the company's growth.
When we discover promising companies through research, our investment is value-driven. We look for limited downside risk and strong upside potential. By investing in under-followed emerging companies with high growth rates and attractive valuations, we capture the price/earnings re-rating and the share price growth that comes when the broader market recognizes a company’s potential. Subsequent analyst coverage and heightened investor interest results in increasing liquidity, rising market capitalization, and ultimately a persuasive return on our original investment.
We exit our position when the company is fairly valued to its future revenue streams, its catalyst for growth is no longer present, or communication between management and Arcstone Capital becomes limited.