About ITUS

Investing in growth in the public markets

Research Center

Study our investing style and process at length

Owner's Manual

We are a fiduciary of your capital. Your understanding of what we do and how we will approach it is a critical element in enabling us to attain our goal. The Owners Manual helps achieve this....

Learn more

Life gives you varying opportunities irrespective of one’s profession to pursue the path of specialization vs being a ‘generalist’. In today’s world being a ‘generalist’ has been associated with a definition of not knowing what one is good at, more specifically, extend the same argument to not good at anything.

A recent book I was reading – Range, talks about the value of being a generalist rather than a lifelong or career-long specialist, argues that many of the most effective people in elite professional fields (such as sports, art, and scientific research) succeed not despite the fact but because they find their way to that particular field after pursuing other endeavors first.

While addressing sport, there cannot be two stark and contrasting childhoods of two sporting geniuses: Tiger Woods— whose early, all-consuming childhood specialization in golf under his father’s tutelage has become a template for parents who want to prime their kids for excellence and another: Federer – who played several sports as a child and an adolescent. His parents encouraged him only in the direction of good sportsmanship, and when he began to gravitate toward tennis, they cautioned him against taking the sport too seriously. Years later, Federer has credited the hours he spent dabbling in basketball, handball, skiing, wrestling, swimming, table tennis, and skateboarding with helping him develop his hand-eye coordination and his famously well-rounded athleticism.

The same pattern repeats across a field as diverse as arts and writing. Shakespeare specialized in writing plays, but his experiences as an actor, poet, and part-owner of a theater company informed what he wrote. So did his knowledge of Latin, agriculture, and politics. Indeed, the earliest known reference to his work comes from a critic who accused him of being “an absolute Johannes factotum” (jack of all trades).

Leonardo Da Vinci was an infamous generalizing specialist. As well as the art he is best known for, Da Vinci dabbled in engineering, music, literature, mathematics, botany, and history. These areas informed his art — note, for example, the rigorous application of botany and mathematics in his paintings. Some scholars consider Da Vinci to be the first person to combine interdisciplinary knowledge in this way or to recognize that a person can branch out beyond their defining trade.

History and Nature are replete with examples of the same when around 2700 years ago, the Greek poet Archilochus wrote: “the fox knows many things; the hedgehog one big thing.”

*****************************************************************

        If you can’t adapt, changes become threats instead of opportunities.

*****************************************************************

The above has had ramifications of how we have structured Itus Capital as a firm. In financial institutions, more specifically funds across India, one would see sector specialists as the norm who are responsible and the go-to people for any minute detail around a sector. One would find banking specialists, metals and mining specialists, pharma specialists and the list goes on….

This is not something that I believe is beneficial in the long-term for building a good long-lasting investment firm. A specialist in a sector is taught to analyze companies with a certain lens on, however, the role of an asset manager is to construct the best portfolio that he/she believes offers long term earnings growth, and not to pick the best company from each sector. This can very well be seen around how shareholder returns across market leaders across sectors have changed by their very definition:

  1. Market leaders in FMCG Companies barely gave 3% IRR over a 10 year period from 1998 to 2008 but over the next 10 years gave a return of 22%.
  2. Infrastructure companies were the darling of investors and research community between 2003-08 and have eroded capital in most cases for the next 12 years.

It’s important that an asset manager looks at his role as someone who understands a business than someone who approaches it from a sector specialist. At Itus Capital, one would find people who are problem solvers than those who are research/sector specialists. While we have received interest from candidates who are some of the brightest sector specialists, we do not believe they would fit the framework we expect a good investor to operate from.