Strategy & Approach

Our guiding philosophy

In an era of instant gratification and 24/7 information, it’s easy to think that a fortune can be made overnight thanks to a tip. The truth is, trying to time the market is near impossible. We believe that over the long run, extremes balance out and good businesses will not just succeed, but beat benchmarks.

Tamohara Investment Managers plays the long game, and adds the crucial-but-forgotten ingredient to good investing: TIME. Rather than trying to take advantage of ephemeral, short-term volatility, we train our attention on finding businesses capable of creating long-term wealth. While markets tend to focus on small increments and quarterly profits, we seek sizable fundamental value creation and compounded returns - looking at free cash flows and well-funded balance sheets. A high stock price might not necessarily underlie a good business. On the other hand, in the long run, good businesses almost always reflect a good stock price.

Additionally, we factor in mean reversion and normalization of forecasts - meaning, we don’t get carried away with short-term trends and assume they will be the norm forever. While not participating in euphoria might seem conservative, it helps give our investors realistic expectations and avoid downsides over the long run - what goes unexpectedly up, will eventually come down!

This approach, we believe, will serve our customers better while protecting their investments: Capturing the market’s upside is easy, but insulation from its downsides requires effort.

“The two most powerful warriors are patience and time.” - Leo Tolstoy

Our Approach & Competitive Advantage

It is well-established that trying to ‘time the market’ is futile. We use our time and energy to identify quality businesses to invest in.
We believe good businesses are capable of delivering higher long-term returns for our investors. Our strength lies in identifying such businesses - with our process and people.

A larger analyst team doing comprehensive primary research

We do proprietary, in-depth research of companies we consider investing in, giving us insights that glancing through a publicly-available P&L sheet won’t. We engage with not just senior management, but employees, retail outlets, consultants, industry experts and end users. This gives us an excellent sense of a company’s fundamentals, outlook, operations and practices. We do this by having a larger team of analysts, who look at 15-20 stocks each, while the industry norm is over 50. Good research can’t be rushed.

An unmatched process

While several companies focus on a ‘star investor’, our strength is a team-driven and time-tested process. A larger investment team also means customers of bespoke solutions have more individual attention.

Playing financial detective

We engage with third-party companies to conduct forensic checks on businesses we might invest in. This might include physical infrastructure such as warehouses, financial statements and shareholding patterns. This helps minimize the chances of a downside which, in the long run, insulates our investors from the risks associated with the market.

An eye on the right metrics

A quality business will always succeed - and for that, we look at cash flow generation and reinvestment potential. We don’t get distracted by recency bias, historical index valuations, or short-term analyst forecasts. As a result, we end up picking what others might neglect because of one quarter in the red or speculation.

We have skin in the game

We are customers of our own products. A large part of our top management are co-investors in our strategies. Moreover, employee remuneration is linked to the performance of investor portfolios. Thus, the interests of everyone are aligned: the investment partner, the management, the employees, and the company. For us, “your success is our success” is not a cliche!

And finally, we walk the ‘long-term’ talk

Investors are getting savvier about the benefits of long-term investing. Some companies have responded to this demand by advertising long-term solutions but still using a short-term approach. That’s not surprising: Identifying businesses that deliver long-term returns involves a different mindset, commitment and resources. At Tamohara, this has been ingrained in our DNA to the point where our analysts do not look at 24/7 news coverage. After all, today’s headline will not reflect in tomorrow’s stock price. They say will power is a virtue - this is true of investments as well!

Our Proprietary Process

At the core of our investment process lies our ability to identify good businesses and invest for the long term, focusing on wealth creation.

Universe Population

Broad monitoring lists of stocks is filtered on a number of criteria - quantitative (return on capital, judicious leverage, free cash generation, etc.) and qualitative (management track record, competitive advantage and business opportunities).

Screening

The universe is then screened to understand the business drivers and analyze historical, financial, arriving at a focus list. The process seeks answers to questions around the business’ fundamentals, scalability, sustainability, profitability and ability to generate free cash flows.

Checklist

Detailed investigation of the focus list allows us to arrive at an investable universe. This due diligence is driven by a comprehensive proprietary checklist that focuses on weeding out businesses that do not meet our stringent criteria, which include the position of the industry and the company within it, the operational and financial aspects of the business, a 5-year future road map, and finally arriving at a fair value estimate.

Portfolio

Basis the above, we develop a portfolio: Either in the form of our flagship TLES and TIOS products, or a bespoke solution tailored to your specific needs.

Major factors we consider

Size and achievability of opportunity, quality, profitability

Entry barriers, replicability, scalability, industry structure, technology

Integrity, ambition, interest of minority shareholders, adaptability

Caution against destructive capital allocation, focus on cash flows to shareholders

Potential to generate free cash, high return on incremental investments

Contact Us

Tamohara can help you grow your and your customers’ wealth over the long term. To schedule an appointment with our team to discuss how we can help you, get in touch below.