Piper Serica PMS

About

Piper Serica is a SEBI registered provider of Portfolio Management Services (PMS) and advisor to Piper Serica India Numero Uno Fund, a FPI based in Mauritius. Both these entities invest in stocks listed in India. It was founded in 2003.

Piper Serica also manages Piper Serica Angel Fund, a SEBI Cat 1 AIF that invests in Indian start-ups.

Piper Serica uses a top-down investment strategy. It identifies sectors that will grow rapidly for next 10-15 years and then invests in the most competitive company in the sector. The objective of the investment strategy is to grow wealth over a long period of time by investing in LEADERS in sectors that COMPOUND earnings for a very long period of time with very little business volatility.

Its portfolio consists of multi-baggers like Dixon Technologies, APL Apollo, Apollo Hospital, Titan, Bajaj Finance, ICICI Bank, Affle, CDSL, CAMS, Divis, LTI, CMS Infosystems and Angel One.

For its Start-up Fund, Piper Serica has created an AI/ML based tool called yoda.ai to screen start-ups. This tool takes into account 17 variables to predict the probability of success of the start-up. This tool has led to successful investments in start-ups like Khatabook, Junio, Anaxee, Apxor, ASQI, Fleetx.ai, Nuvepro, Mynvax, Alt Mobility, Crediwatch and Insorce.

Key staff

Abhay Agarwal, Founder and Fund manager, has over 28 years of investing experience. Prior to founding Piper Serica, Abhay worked as a Director with the Private Equity group of JP Morgan in India, HK and Singapore (1997-2004). He invested in companies in India, Korea, Australia, Singapore, China and the US. His investments include HDFC Bank, Piramal Glass, Jubilant Foodworks, Nicholas Piramal (acquired by Abbott), Bharat Forge, MTR Foods (acquired by Orkla), Mando Machinery Korea, Marico and HDFC Securities. Abhay worked with Citibank India from 1993-1997. He managed a direct investment program for the bank that made some very successful investments. Abhay has done B.com from Sydenham College, Mumbai (1991) and MBA from Jamnalal Bajaj Institute of Management (1993).

Rajni Agarwal, director, research, is a key contributor in developing the Piper Serica Leader Portfolio Strategy. She provides research support for application of Michael Porter’s 5 Forces Model across industry verticals.

Rajni started her career as a Research Analyst at SBI Fund Management in 1993. She then served as a Fund Manager at one of the largest debt schemes at SBI Mutual Fund. Her role as a fund manager involved allocating funds across various debt instruments and ensuring an appropriate risk adjusted return to investors. She was involved in regular credit monitoring and credit appraisal of portfolio companies.

Rajni completed her MBA from Jamnalal Bajaj in 1993. Prior to that she obtained a Master’s degree in Economics from Delhi School of Economics, Delhi in 1991.

Ajay Modi, vice president, research, is an electronics and telecom engineer from the University of Pune. He also holds a certificate in Investment Research & Analysis from CISI Institute, London & is also a CFA Level 3 Candidate, CFA Institute USA. Ajay has been a part of Piper Serica for 5 years. Prior to this he worked at KPO for Thomson Reuters where he created detailed financial models for some of the worlds largest asset management companies viz. Aberdeen AMC, Nomura, Rothschild & Co. and also developed deal marketing materials for large corporations viz. BMW Group AG, AVIS Rent A Car, BHP Billiton etc. At Piper Serica, his role involves primary & secondary research, & portfolio management. He also looks after compliance for Piper Serica PMS.

Investment philosophy

We are top-down investors. Our strategy is to invest in companies that are not only numero uno in their respective industry but have constantly grown the competitive moat to protect their pole position. We first identify industry verticals and sub-verticals that we believe would grow on a secular basis for the next 15-20 years based on change in demographics, consumption patterns and technology.

We then identify the clear Leader of the vertical and put it through a proprietary diligence framework that is based on Michael Porter’s 5 Forces Competitive Edge Model. We rate each company across 35 parameters to establish whether it has a clear competitive edge over the challengers and the ability to grow at a faster rate and more profitably. For this rating we depend on our primary research where our deep relationships with industry participants, dealers, distributors, bankers, suppliers etc. are invaluable.

Based on the valuation range that we establish for each company in the portfolio, we actively manage the allocation. This dynamic allocation is the secret sauce of our superior returns. Another reason for our superior performance is that the key attributes of our portfolio companies across growth, profitability and leverage, are better than all popular indices (both individually and on an average).

We have a robust risk management and allocation strategy to ensure that we regularly book profits and do not allocate more than 6% to any single company

To summarize: Our investment process is very rigorous and disciplined. Investment decisions are made by a team and not an individual. Our process minimizes the risk of human and emotional biases by focusing on facts rather than opinions. We benefit from a proprietary network that we have created across industries for primary data collection.

Media

How to invest in businesses of the future, May 25, 2021, PMS AIF World, https://youtu.be/Xht7k1vXjZQ 

In this interview, we can see Mr. Abhay Agarwal talking about how to invest in businesses of the future. 

He says that old industries get disrupted with the evolution of technology, consumer preferences, cost of production and distribution. And he also states how industries got disrupted by digital technology. 

And we can see him talking about portfolio construction. So he feels that returns are generated as a result of future earnings. So the first step involved in portfolio construction is identifying the industry with high growth. Then finding out the most competitive company in that space or industry and being invested in it. And the final step is the management of portfolio risk by adequate diversification.

They want to invest in companies with competitive advantage and they test the competitive advantage of the companies by adopting porter’s five forces model. They rate each portfolio company based on 35 sub parameters and assign ratings to them on a scale of 1-10. They only invest in companies whose average rating is more than 7 across all the sub parameters. 

He also talks about risk management. Their optimal portfolio size is 15-18 stocks. And no company or no sector can be assigned more than 10% weightage i.e., maximum single sector or company weightage is 10%. They also do quarterly review of portfolio weights and take action as required. They also define fair valuation range and strictly adhere to them. They also have adopted the cfa institute code of ethics and standard of professional conduct.

They basically are growth investors.