Team Saurabh Mukherjea smallcap portfolio: Here are top B2B stocks picks
1 min read 29 Sep 2022, 11:57 AM ISTGiven Little Champs’ philosophy of investing in smallcaps which are market leading franchises, the portfolio has a preponderance of niche B2B names
PremiumGiven Little Champs’ philosophy of investing in smallcaps which are market leading franchises, the portfolio has a preponderance of niche B2B names. Conventional arguments against B2B companies centre around their weak bargaining power vs much larger customers & suppliers and lack of entry barriers around brands & distribution, said Marcellus Investment Managers in a recent note.
“However, unlike a typical B2B company, the Little Champs’ have been able to create enduring moats through the criticality of their products, their product & process differentiation, and their capital allocation initiatives (which has driven the diversification of their customer base). All of this is reflected in the Little Champs’ ability to grow profits and returns on capital employed over extended periods of time," the note stated.
Sharing its top stock picks, Marculles' Little Champs Portfolio has significant allocation to B2B business which include Alkyl Almines, Fine Organic Industries, Galaxy Surfactancts, Garware Technical Fibres, GMM Pfaudler, Paushak, Tarsons Products, Mold-tek Packaging, Suprajit Engineering, Ultramarine & Pigments Ltd.
“Most B2C sectors, worth investing in are large in size and investing in market leading franchises in such large sectors are outside the bounds of the portfolio (due to market cap restrictions). Whilst there are some portfolio stocks in niche B2C categories e.g. the pain balm segment in the case of Amrutanjan and regionally dominant retail players like V-Mart, Vijaya Diagnostics, such names are the exception rather than being the norm in Little Champs. On the other hand, the diverse nature of B2B businesses makes it a fertile breeding ground for finding niche market leading franchises. Hence there is a tilt towards B2B names in the Little Champs portfolio," it said.
Well-known money manager Saurabh Mukherjea is the Founder and Chief Investment Officer of Marcellus Investment Managers. “At Marcellus, the key objective of our Little Champs PMS is to own a portfolio of about 15-20 sector leading franchises with a track record of prudent capital allocation, clean accounts & corporate governance and at the same time healthy growth potential. We intend to keep the portfolio churn low (not more than 25-30% per annum) to reap the benefits of compounding as well as minimize trading costs. The Little Champs Portfolio went live on August 29, 2019."
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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