| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 15.4% | - | 12.4% |
Compound Everyday Capital delivered 12.4% YTD returns through June 2026 with 82% equity exposure, while underlying portfolio earnings grew 34.4% year-over-year. The manager maintains an aggressive stance after deploying capital during March's 10-15% market decline triggered by the US-Iran war. The letter emphasizes a rejection-first investment philosophy, systematically eliminating ordinary companies to focus on 100-200 truly exceptional businesses among India's 2,000 listed companies. Portfolio quality metrics remain strong with 43% ROIC versus 18.5% for the BSE 500 benchmark. Key risks include potential AI disruption to India's services economy, moderating domestic retail flows with SIP stoppage ratios crossing 100%, and elevated valuations across market segments. While foreign capital flows toward AI beneficiaries in other markets, Indian retail investors continue absorbing supply through Rs 30,000+ crore monthly SIP inflows. The manager added to an existing position making it a major holding and initiated a 2% toehold position, maintaining conviction that price and value ultimately converge despite extended divergence periods.
The manager pursues a concentrated value strategy in India focused on owning 100-200 truly exceptional businesses identified through systematic rejection of ordinary companies, maintaining that disciplined focus on business quality, durable competitive advantages, and paying reasonable prices will generate superior long-term returns as price and value ultimately converge despite extended periods of divergence.
The manager maintains an aggressive stance despite elevated valuations and moderating retail flows. While acknowledging risks from AI disruption, potential earnings volatility from supply chain issues, and signs of retail flow moderation, the manager sees selective opportunities in reasonably priced pockets. The outlook reflects cautious optimism grounded in disciplined valuation discipline and focus on high-quality businesses with durable competitive advantages.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jul 8 2026 | 2026 Q2 | - | AI, India, Portfolio Management, Quality, retail flows, Valuations, value | - | Indian value manager delivered 12.4% YTD returns with portfolio earnings up 34% despite market volatility from US-Iran conflict. Maintains aggressive stance at 82% equity exposure, adding to concentrated positions in high-quality businesses with 43% ROIC. Faces headwinds from capital flowing to AI themes and moderating retail investor flows, but sees opportunity in disciplined rejection-first approach focusing on exceptional businesses trading below intrinsic value. |
| Apr 9 2026 | 2026 Q1 | - | Buybacks, diversification, India, liquidity, Mutual Funds, oil, value | - | Compound Everyday Capital turns aggressive for first time in six years as crude oil shock creates opportunities in Indian markets. Manager emphasizes smart diversification across risk exposures rather than just sectors. Portfolio shows strong fundamentals with 20.6% earnings growth despite temporary market volatility from Middle East conflict. |
| Jan 8 2026 | 2025 Q4 | - | AI, Competitive Advantage, India, long-term, Portfolio Management, Quality, value | - | Compound Everyday Capital posted 25.7% YTD returns with 19% underlying earnings growth. Manager maintains neutral stance amid high market valuations, holding 19% cash while analyzing lessons from 13-year winners. Key focus on competitive advantages and reasonable pricing during temporary hardships. Risks include AI bubble correction and flow shifts to cheaper Asian markets. |
| Oct 8 2025 | 2025 Q3 | - | Capital markets, earnings, growth, India, Quality, retail, risk management, Valuations | - | Compound Everyday Capital targets 15%+ earnings growth not priced into stocks through quality companies at reasonable valuations. With 17.3% YTD returns and underlying earnings growing 13.6%, the manager maintains neutral stance amid retail-driven market elevation. Key concerns include overvaluation and flow unpredictability, while GST and tax cuts provide potential catalysts. Discipline and patience emphasized over aggressive deployment. |
| Jul 8 2025 | 2025 Q2 | RCOM.NS | Cash Management, India, Quality, risk management, valuation, value | - | Indian value manager delivered 14.8% YTD returns while maintaining 28% cash reserves in expensive markets. Focus on One Durable Variable Businesses enables better risk control through companies driven by single, durable cash flow drivers. Disciplined valuation approach positioned fund well during recent correction. Expects next phase to reward patience as valuations normalize. |
| Apr 11 2025 | 2025 Q1 | CDSL.NS | AI, Capital Deployment, India, P/E Ratios, risk management, Trade Policy, Valuations | CDSL.NS | Indian equity manager delivered 10.3% Q1 returns while maintaining 21% cash amid elevated valuations. Nearly half of top 700 Indian companies trade above 40x P/E with unrealistic growth expectations. Exited CDSL at 8x gain, added to existing positions. Changed stance from Cautious to Neutral as corrections create selective opportunities despite ongoing valuation concerns and global trade uncertainties. |
| Jan 8 2025 | 2024 Q4 | - | India, Market Valuations, Quality, Retail Participation, risk management, SmallCaps, value | - | Compound Everyday Capital's falling less strategy outperformed in Q4 2024, declining only 0.6% versus BSE 500's 7.8% drop. Manager maintains cautious stance in elevated market driven by retail FOMO rather than valuations. Focus remains on quality companies at reasonable prices with smart diversification. Added one toehold position despite expensive valuations. |
| Oct 11 2024 | 2024 Q3 | - | Cash, India, IPOs, retail, risk management, valuation | - | Compound Everyday Capital maintains cautious positioning in expensive Indian markets driven by speculative retail demand. Portfolio delivered 18% YTD returns while preserving 21% cash reserves and reducing small cap exposure. Management draws parallels to historical retail manias, expecting eventual supply-demand rebalancing. Focus remains on quality companies with significant cash available for better opportunities. |
| Jul 6 2024 | 2024 Q2 | RADIOCITY.NS | Bubbles, Derivatives, India, Quality, risk management, valuation | - | Indian fund maintains cautious stance amid extreme market overvaluation, with derivatives volumes surging and retail speculation rampant. Focus remains on quality companies at reasonable prices while building 22% cash reserves. Portfolio delivered 8.9% YTD returns despite avoiding expensive sectors. Strategy positions for inevitable correction while maintaining discipline against speculative euphoria. |
| Apr 10 2024 | 2024 Q1 | RADIOCITY.NS | Discipline, Elections, India, liquidity, Portfolio Management, SmallCap, value | - | Indian value manager maintains disciplined approach with 26% cash amid elevated valuations, delivering 29.2% returns but underperforming BSE 500's 40.2%. Warns that 997 of 1000 random portfolios beat index since 2021 due to market direction, not skill, creating dangerous beginner's luck. Emphasizes protection first philosophy while acknowledging near-term frustration with cautious positioning. |
| Jan 8 2024 | 2023 Q4 | RADIOCITY.NS | Caution, Derivatives, India, IPOs, Quality, retail, value | - | Indian value fund delivered 28% returns while maintaining defensive 73% equity allocation amid concerning retail euphoria. Manager cites record SME IPO flows and derivatives speculation as warning signs, maintaining significant cash reserves for capital protection. Underlying earnings grew 59% demonstrating strong fundamentals, but expensive valuations and speculative behavior warrant continued caution over performance chasing. |
| Oct 7 2023 | 2023 Q3 | - | Bubble, Discipline, fundamentals, India, retail, small caps, value | - | Indian value manager delivers 16.7% YTD returns while warning of smallcap bubble conditions. Underlying earnings grew 35% as manager maintains pricing discipline, keeping smallcap exposure at 20%. Record insider selling and retail euphoria signal dangerous market conditions. Portfolio concentrated in attractively valued names with increased positions in top holdings. |
| Jul 7 2023 | 2023 Q2 | - | Cash, Discipline, India, Quality, valuation, value | - | Compound Everyday Capital maintains disciplined value approach with 25-30% cash, waiting for better prices in expensive Indian markets. Quality stocks show bubble characteristics at 40x+ P/E ratios. Portfolio earnings grew 16% with 18% growth expected. Fund underperformed but remains patient, believing their five-hurdle investment process will deliver when valuations normalize. |
| Apr 7 2023 | 2023 Q1 | MUSICB.NS | Banking, India, risk management, small caps, special situations, value | MUSICB.NS | Indian value manager delivered -4.3% in FY23, underperforming benchmarks while reducing cash from 38% to 30% by adding to positions. Special situation mistake in Music Broadcast cost 1% AUM but provided learning opportunities. Underlying earnings grew 11%. Manager sees TINA-to-TANIA regime shift creating deployment opportunities amid global equity flow moderation. |
| Jan 9 2023 | 2022 Q4 | - | - | - | |
| Oct 7 2022 | 2022 Q3 | - | - | - | |
| Jul 8 2022 | 2022 Q2 | - | - | - | |
| Apr 9 2022 | 2022 Q1 | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
AIAI remains the dominant global investment theme and major destination for capital flows. India has few direct beneficiaries of AI infrastructure buildout, causing capital to gravitate toward markets with semiconductor and AI hardware exposure. There is concern that AI could disrupt parts of India's services-led economy, contributing to cautious views on Indian equities. |
Semiconductors Infrastructure Services Capital Flows |
IndiaIndian markets fell 10-15% in March 2026 due to US-Iran war but recovered 8-10% in April. Domestic retail investors continue providing strong support through SIP inflows above Rs 30,000 crore monthly, absorbing foreign selling. However, early signs of moderation appear with SIP stoppage ratios crossing 100% and lump-sum equity flows turning negative in May. |
Retail Flows SIP Valuations Foreign Flows | |
ValuationsThe manager questions whether markets' tendency to bring price and value together has weakened, with valuations remaining elevated longer than expected. While some exceptional businesses justify demanding valuations, the principle that value remains anchored to cash generation persists. Price and value may travel separately for extended periods but ultimately converge over time. |
Price Value Convergence Cash Flows | |
QualityThe manager emphasizes a rejection mindset over selection mindset, systematically eliminating ordinary companies to find the 100-200 truly exceptional businesses among 2,000 listed Indian companies. Portfolio companies demonstrate strong fundamentals with 43% ROIC versus 18.5% for BSE 500, and trailing earnings grew 34.4% year-over-year. |
Business Quality ROIC Earnings Growth Competitive Advantages | |
| 2026 Q1 |
DiversificationManager emphasizes smart portfolio diversification beyond crude oil exposure, advocating for exposure diversification across different risk factors rather than just sector diversification. Discusses three-step process of quality, price, and exposure diversity. |
Risk Management Portfolio Construction Correlation Exposure |
OilCrude oil shock from Middle East conflict caused market decline, but manager views this as temporary dislocation driven more by sentiment than fundamentals. Portfolio has manageable exposure with 7.6% adverse and 14.0% favorable exposure to crude. |
Geopolitical Energy Volatility Temporary | |
BuybacksRecent budget changes corrected buyback taxation to capital gains treatment, but only for non-promoter shareholders. Manager welcomes these changes and expects more buybacks done for right reasons rather than tax arbitrage. |
Capital Allocation Tax Policy Shareholder Value | |
LiquidityMutual fund stress tests understate true liquidity risk in smallcap funds. Manager calculates actual liquidation time could be 3-4x reported figures, potentially posing systemic risk requiring regulatory intervention similar to bank reserve requirements. |
Systemic Risk Mutual Funds Regulation Smallcap | |
| 2025 Q4 |
AIManager discusses AI's impact on investing and markets extensively, noting AI companies drive US market returns and GDP growth. Explores thought experiment of AI agents taking over public market investing, outlining prerequisites and consequences. Views AI as potentially creating market efficiency but also systemic risks. |
Artificial Intelligence Algorithmic Trading Market Efficiency Technology Automation |
ValueManager emphasizes value investing principles through analysis of 13-year winners, highlighting importance of competitive advantages, reasonable valuations, and not selling on moderate overvaluation. Notes current challenge is finding reasonably priced opportunities in expensive markets. |
Value Investing Competitive Advantage Moats Valuation Margin of Safety | |
QualityEmphasizes quality characteristics in winning investments including dominant market positions, durable moats, strong management execution, and sustainable competitive advantages. Portfolio focuses on companies with high return on invested capital and strong fundamentals. |
Quality Investing Competitive Moats Management Quality Return on Capital Sustainable Advantage | |
| 2025 Q3 |
ValuationsManager emphasizes that many companies today are pricing in much higher future earnings growth expectations compared to what they have delivered in the past and their future earnings potential. This dichotomy is sustaining due to continued buying from retail investors at every level, but earnings growth and share price growth usually converge over time. |
Overvaluation Earnings Growth Retail Convergence |
QualityThe manager focuses on investing in companies with strong balance sheets, competitive advantages, and able management. Quality focus combined with valuation discipline helps cushion portfolios in volatile markets, as quality companies tend to get stronger and recover faster during downturns. |
Balance Sheet Competitive Advantage Management Resilience Recovery | |
Capital MarketsDomestic flows remain strong with retail investors actively participating in mutual funds and IPOs. The concern is that much of this money is chasing smaller and riskier companies, while promoters and private equity investors are using this retail demand to exit at record valuations. |
Retail Flows IPOs Mutual Funds Exit Valuations | |
| 2025 Q2 |
ValuationManager emphasizes valuation discipline as anchor in high-valuation environment. Maintained 28% cash reserves over five years waiting for rightly priced opportunities. Believes next phase will reward discipline as valuations revert toward long-term averages. |
Intrinsic Value Discipline Mean Reversion Cash Opportunities |
RiskPortfolio risk controlled through One Durable Variable Businesses (1DVB) concept - businesses driven by single, durable cash flow variables. Diversification across different drivers ensures positions don't all falter simultaneously, lowering portfolio risk. |
Risk Control Diversification 1DVB Portfolio Variables | |
QualityFocus on businesses that are easier to value with reasonable confidence, trading at or below intrinsic worth. Quality stems from competitive advantage, stakeholder benefit, and governance. Durability essential for long-term forecasting. |
Business Quality Durability Competitive Advantage Governance Stakeholder | |
| 2025 Q1 |
ValuationsNearly half of India's top 700 companies trade at over 40x P/E, building in lofty expectations. At 40x P/E, markets expect 18% annual free cash flow growth for a decade followed by 5% growth for 90 years. Only 20% of these high-multiple companies have achieved 18%+ earnings growth over the past 10 years, with median growth at 15%. |
P/E Ratios Expectations Growth Multiples Overvaluation |
AIArtificial intelligence is reshaping the technology landscape with US tech giants investing heavily in AI infrastructure while Chinese firms like DeepSeek and Baidu emerge as contenders. AI's impact on healthcare, mobility, security, and automation presents both opportunities and disruption risks, similar to past technological revolutions. |
Technology Infrastructure Disruption Healthcare Automation | |
Trade PolicyTrade tensions are back in focus with the return of US tariffs under President Trump. Trade policies are unpredictable and history suggests protectionism often leads to economic inefficiencies and geopolitical instability. Both tariffs and AI add to global uncertainty, reinforcing the need to be demanding of equity multiples. |
Tariffs Protectionism Uncertainty Geopolitical Inefficiencies | |
| 2024 Q4 |
Risk ManagementManager emphasizes falling less is more important than rising more in elevated markets. Focus on capital preservation and avoiding large drawdowns has higher probability of success than chasing high returns. Quality focus, valuation discipline, and smart diversification are key to falling less in heated markets. |
Quality Valuation Diversification Capital Preservation Drawdowns |
Retail ParticipationRetail investor activities have increased 3x-11x over last 5 years, driving 25% and 32% CAGR returns in midcap and smallcap indices. FOMO rather than valuations is the main driver of investor enthusiasm today. This has led to outperformance of smallcaps over largecaps. |
Retail FOMO Smallcaps Midcaps Participation | |
Market ValuationsCurrent market characterized as elevated with buying price matters and valuations tend to mean revert. Smart money is exiting with promoters and PE investors selling Rs 3 lac crores in 2024. Foreign investors have been net sellers while retail investors channel buying into small and midcaps. |
Elevated Mean Reversion Smart Money Foreign Outflows Promoter Sales | |
| 2024 Q3 |
Risk AppetiteRetail demand for stocks in bull markets creates price-agnostic buying that pushes prices higher. Historical examples from India (1990s), China (2015), and US (1980s-2000s) show that excessive retail demand eventually attracts supply or subsides, leading to price corrections. Current Indian markets show similar patterns with disproportionate retail participation. |
Retail Speculation Demand Supply Cycles |
Capital MarketsSME IPOs have surged dramatically with 197 issues raising ₹7,000 crore in 2024, showing median oversubscription of 179x versus 41x in 2023. Thematic mutual funds have become the largest category with ₹4.2 trillion AUM, capitalizing on regulatory loopholes. Both represent speculative excess in current market conditions. |
IPOs Mutual Funds Speculation Regulation Oversubscription | |
LiquidityBank deposit growth lags loan growth (10% vs 13%) due to RBI tightening money supply to control inflation. This is a temporary phenomenon that will correct as inflation is brought under control. The lag reflects monetary policy dynamics rather than permanent structural shifts. |
Deposits Loans Money Supply Inflation RBI | |
| 2024 Q2 |
ValuationMarkets remain expensive with price-to-sales ratios at extreme levels. Over 100 of top 750 companies trade at 10x+ price-to-sales versus 20-year average of 25 companies. Median price-to-sales ratio is 3.5x versus 20-year average of 1.1x. Small and midcap indices show stark overvaluation with Nifty Midcap 100 and Smallcap 100 trading at 5x and 4.4x price-to-book ratios. |
Overvaluation Price-to-sales Price-to-book Expensive Stretched |
Risk AppetiteDerivatives volumes surge with India accounting for 80% of global derivatives volumes. Weekly options provide 500x leverage allowing Rs 5 lacs exposure for Rs 1,000 premium. Retail investors chase past performance with 50% of equity mutual fund flows going to already expensive smallcap, midcap and thematic funds. SME IPO index up 250% in 12 months. |
Derivatives Leverage Speculation Weekly options Retail | |
QualityManager continues focus on reasonably priced quality companies as protection against market exuberance. Strategy involves building quality portfolio at reasonable prices with belief such portfolios recover first after crashes. Emphasis on double-checking thesis daily and rejecting poor quality or expensive ideas despite their continued rise. |
Quality companies Reasonable prices Discipline Thesis Recovery | |
| 2024 Q1 |
LiquidityManager discusses unprecedented flows into smallcap mutual funds creating illusion of safe asset class with high returns. Liquidity stress tests show top 5 smallcap schemes would take 22-60 days to liquidate 50% of holdings. Warns that liquidity present in buoyant markets can vanish during crashes when everyone exits simultaneously. |
Smallcap Mutual Funds Stress Test Redemptions Circuit Breakers |
ValueFund maintains commitment to protection first, returns later approach, acquiring assets below conservatively assessed values. Manager acknowledges this criterion often not met in current market, leading to cautious stance and underperformance versus broader indices. Emphasizes that fundamental principles of valuation cannot be defied indefinitely. |
Intrinsic Value Discipline Patience Underperformance Fundamentals | |
Small CapsExtensive analysis of smallcap performance showing 997 of 1000 random portfolios outperformed BSE 500 from 2021-2024 due to relentless ascent since Covid lows. Many smallcap stocks surged 3x to 12x with less than 1% index weight. Manager warns this creates beginner's luck that may lead to winner's curse when conditions change. |
Random Portfolios Outperformance Covid Recovery Winner's Curse Market Direction | |
| 2023 Q4 |
ValueManager emphasizes value investing principles throughout, citing Charlie Munger's wisdom that all intelligent investing is value investing - acquiring more than you are paying for. The fund maintains price and quality discipline while deploying capital in expensive markets, focusing on protecting downside rather than chasing returns. |
Value Investing Price Discipline Quality Downside Protection Margin of Safety |
Risk AppetiteManager expresses extreme caution about current market euphoria, particularly retail participation in risky segments like SME IPOs and derivatives trading. The fund maintains a defensive stance with only 73% equity allocation, emphasizing the need to protect capital during speculative periods when retail investors show no fear. |
Retail Euphoria SME IPOs Derivatives Defensive Positioning Market Speculation | |
| 2023 Q3 |
Small CapsSmallcaps are in bubble territory with the BSE Smallcap index crossing 2018 peaks relative to largecaps. Retail euphoria has driven Rs 54,000 crores into small and midcap mutual funds in 12 months, creating a vicious cycle of higher returns attracting more flows. The manager maintains low smallcap exposure at around 20% due to extreme valuations. |
Bubble Retail Valuations Flows Euphoria |
ValueThe manager emphasizes sticking to pricing discipline and acting only when stocks come within their valuation range. They focus on eternal truths including that stock value is the present value of cash that can be taken out of the business over its life. Only a subset of their wish-list stocks remain cheap today. |
Discipline Fundamentals Intrinsic Conservative Process | |
| 2023 Q2 |
QualityManager identifies a bubble in quality stocks, with high-quality companies trading at over 40x P/E ratios and pricing in earnings growth 1.2x-2.0x their past 10-year run rates despite larger size and higher interest rates. Quality stocks with high returns on invested capital, low debt, and high sales growth are particularly expensive. |
Quality Valuation Bubble Returns Growth |
ValueThe fund practices a disciplined value approach with five investment hurdles including understanding, opportunity size, competitive advantage, management quality, and valuation. They maintain high cash levels waiting for better entry prices and emphasize not overpaying for quality companies. |
Value Discipline Valuation Entry Price | |
| 2023 Q1 |
Risk ManagementManager emphasizes portfolio safety through diversified holdings of good companies bought cheaply, comparing risk controls to car seat belts. Discusses the importance of maintaining safety margins even during good times to protect against inevitable market reversals. |
Safety Diversification Valuations Controls |
Special SituationsDetailed analysis of Music Broadcast bonus preference shares investment that resulted in 1% AUM loss. Manager explains the arbitrage strategy around bonus preference shares and lessons learned about locking in returns and choosing quality underlying companies. |
Arbitrage Bonus Preference Mispricing | |
BankingDiscussion of Silicon Valley Bank failure due to concentration risk and interest rate exposure. Manager analyzes how rising rates created mark-to-market losses on bond portfolios and deposit flight, leading to broader implications for global financial stability. |
SVB Concentration Deposits Stability |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Apr 7, 2023 | Fund Letters | Compound Everyday Capital | MUSICB.NS | Music Broadcast Limited | Communication Services | Broadcasting | Bear | NSE | advertising, arbitrage, Bonus Shares, media, preference shares, Radio Broadcasting, Special Situation, Tax Loss Harvesting | Login |
| Apr 11, 2025 | Fund Letters | Compound Everyday Capital | CDSL.NS | Central Depository Services Limited | Financials | Financial Exchanges & Data | Bear | NSE | Capital markets, Capital-light, Depository, duopoly, financial services, Fixed Costs, India, Market Activity, Retail Participation | Login |
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