Ep 2 – Why do we invest in growth

Please find below the transcript for our snippet video:

At Itus, investing in growth forms a core part of our investment philosophy. We believe growth should be a core part of every investor’s portfolio. Why?

1.The Market’s focus on current-quarter earnings

The market easily can be distracted by short-term price movements, losing focus on the long-term effect of companies investing in growth. We believe this offers interesting opportunities as an investor. Itus seeks opportunities that offer growth over the next 3 years that the market ignores or underestimates.

2.Growth is never linear, but PE assumes linearity. Many truly interesting moats that businesses own are dominated by the Top 3-4 players in the industry.

As investors, we look for businesses that are either growing market share or have proxy monopolistic characteristics within their industry structure. This combined with a management who has strong capital allocation history, has flavors of compounding wealth over prolonged periods.

3.Growth is not a function of sectors or market-caps.

As an analyst in Itus, we are business analysts rather than sector analysts. Our on-the-ground due diligence is backed by investment in technology for studying alternative sources of data which we use to understand trends in the market.

4.We cannot be right always

Our open eco-system based research ensures that our clients, partners and potential investors can critique our research, process and allows for an open flow of information between our team and external sources.

We believe the nature of the industry working through valuing businesses through multiples means growth companies have the highest chance of being priced incorrectly. Our structure and process aims to take advantage of this in a structured way.

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