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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Itus Capital focuses on promoter-run B2B manufacturing and auto ancillary companies positioned for structural themes of capex-driven growth and supply chain resilience. The fund deployed cash during Q1 volatility, maintaining concentrated exposure across manufacturing, auto parts, and select financials while expecting 2023 to offer attractive deployment opportunities."
Itus Capital delivered -3.91% in Q1 2023, outperforming the Nifty's -4.12% return. The fund maintains a concentrated approach focused on three core themes: B2B manufacturing businesses with export orientation, auto ancillary companies benefiting from strong order book growth, and selectively chosen financials based on management quality and valuation. Manager Naveen Chandramohan positions the portfolio for structural macro themes over the next 3-5 years including capex-driven global growth, manufacturing-led supply chain resilience, structural inflation, and higher interest rates. The portfolio's 75% exposure spans manufacturing (agri-chemicals, pharma CDMO, refractories), auto ancillaries (power trains, transmission gears, braking systems), and financials (HDFC Bank, IndusInd Bank). Key portfolio characteristics include promoter-run companies with 30+ year track records, market-leading positions, and strong cash flow generation. The fund deployed 28% of cash during Q1 volatility, reducing weighted average cash to 14%, with plans for continued prudent capital allocation as opportunities arise.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
High conviction evidenced by concentrated portfolio with 75% in three core themes, specific named holdings with clear rationale, and definitive statements about structural macro trends over 3-5 years. Manager provides specific position sizing commentary and clear investment criteria.
Growth Outlook
Manager expresses constructive optimism about 2023 being a great year to deploy capital into volatility, but balances this with concerns about structural macro challenges including unsustainable debt levels and inflationary pressures.
Risk Appetite
Fund deployed 28% of cash during Q1 volatility and reduced cash from higher levels to 14%, showing selective risk-taking. Manager plans to continue raising equity exposure but emphasizes prudent capital allocation.
Capital Deployment
Fund deployed approximately 28% of cash during Q1, reducing weighted average cash from higher levels to 14%. This represents moderate deployment activity with stated intention to continue reducing cash balance further.
Forward Guidance
Manager states intention to continue deploying capital and reducing cash balance further, with specific mention that 2023 would be great for bottoms-up deployment, showing moderate deployment bias.
Language Signal
Language is balanced with some positive terms like 'great year to deploy' and 'strong order book growth' offset by risk-focused discussion of debt levels, inflation concerns, and emphasis on prudent allocation.
Perceived Risk
Manager identifies specific systemic risks including unsustainable central bank debt levels, structural inflation concerns, and potential for higher commodity prices and interest rates. These macro risks are discussed in detail with implications for the investment environment.
Opportunity Density
Manager sees selective opportunities, particularly in manufacturing and auto ancillaries with strong fundamentals, and explicitly states 2023 would be a great year for bottoms-up deployment into volatility, suggesting a reasonably rich opportunity set.
Time Horizon
Manager explicitly discusses 3-5 year structural themes and cycles, owns companies with 30+ year track records, and focuses on businesses that reinvest cash flows for incremental growth, indicating a multi-year investment horizon.
