Thread by @NDTVProfitIndia

How to assess whether the current greatness of portfolio companies can sustain over time.

#BQOpinion by @MarcellusInvest's Saurabh Mukherjea & Harsh Shah.
bit.ly/3x79z3C

@MarcellusInvest On average, only 40-50% of the Nifty 50 index constituents continue to remain in the index after a decade, find @MarcellusInvest’s Saurabh Mukherjea & Harsh Shah.

Read their #BQOpinion column: bit.ly/3x79z3C

@MarcellusInvest #BQOpinion | As one would expect, upon exiting, these companies see a significant decline in their market capitalisation and thus the wealth of their shareholders.

Read @MarcellusInvest’s Saurabh Mukherjea & Harsh Shah: bit.ly/3x79z3C

@MarcellusInvest Jim Collins’ celebrated book ‘How The Mighty Fall’ provides a useful framework to identify early signs of whether a hitherto successful company is now declining, write Saurabh Mukherjea & Harsh Shah.

Read more in #BQOpinion: bit.ly/3x79z3C

@MarcellusInvest The journey of a company from greatness to failure is analogous to a terminal disease.

Read @MarcellusInvest’s Saurabh Mukherjea & Harsh Shah in #BQOpinion.
bit.ly/2VgDhpC

@MarcellusInvest In Stage 1, the company has high pricing power, high RoCEs, and healthy free cash flow generation.

However, this leads to ‘arrogance negligence’, write Saurabh Mukherjea & Harsh Shah in #BQOpinion: bit.ly/3eX1CrO

@MarcellusInvest In Stage 2, the hubris at the top management along with ballooning cashflow from core business leads management to feel that success is assured.

Read more in #BQOpinion: bit.ly/3eX1CrO

@MarcellusInvest In Stage 3 of denial or risk and peril, a two-pronged Janus-faced strategy is adopted by the management, write Saurabh Mukherjea & Harsh Shah.

Read more in #BQOpinion: bit.ly/3eX1CrO