Articles
Quarterly Investor Calls
ITUS Long & Short
ITUS Snippets
Articles
Quarterly Investor Calls
ITUS Long & Short
ITUS Snippets
by Vidya Vydianathan
October 25, 2024
Investing in growth in the public markets
Study our investing style and process at length
Owner's Manual
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Our philosophy, as growth investors, centres around investing in businesses that have the potential to generate and grow their cash flows over time. We prioritize companies that are led by management teams that are committed to reinvesting returns for long-term growth, while we also focus on the valuation of businesses before investing.
One of a key parameter for a business to be in our portfolio is ROCE (Return On Capital Employed). A high ROCE indicates that a company is generating significant profits relative to the capital it has employed. This can be a positive sign for investors because it suggests that the company is utilizing its resources effectively and efficiently to generate returns.
A rising ROCE% at the portfolio level is indicative of the efficiency of the constituent companies’ business operations. Consequently, reinvestment of these returns within the businesses is expected to generate compounding cash flow growth. The short term drawdown like now, indicates opportunity to invest in exceptional businesses at reasonable valuations. This is anticipated to result in the fund’s future outperformance over long term.
The chart below demonstrates the remarkable consistency of ROCE% for the ITUS Portfolio over the past two years on yearly and half-yearly basis. As part of our investment strategy, we prioritize investing in companies that demonstrate ROCE% above 20%, indicating a strong ability to generate profits from the capital employed in their businesses.
These weekly episodes are now available in our website for your quick read and you may access the same in the below link.
Weekly Enlightenment Archives – ITUS Capital
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