Covers only cyclical stocks. Thesis: Cheap entry valuations + current downturn + upcycle visibility
This smallcase captures the high-reward potential of deep cyclical turnarounds. We adopt a contrarian approach, targeting established players in sectors like metals, commodities, infrastructure, and auto ancillaries that are currently trading at the "bottom of the cycle"—characterized by peak pessimism, distressed valuations, and ignored asset quality.
Our philosophy is rooted in Mean Reversion and rigorous supply-side analysis. In cyclical investing, the best time to buy is often when earnings look their worst. We look beyond temporary P&L pain and focus on Survival & Operating Leverage. We identify companies where supply consolidation has occurred, capex cycles have bottomed out, and utilization rates are poised to rise.
Selection is strictly based on valuations, replacement cost economics, and balance sheet resilience. We prioritize companies that have used the downturn to deleverage and improve efficiency, ensuring they expand margins disproportionately when demand inevitably recovers. We avoid "value traps" by ensuring the underlying business has a structural competitive advantage.
Risk is managed through diversification across distinct cyclical themes and strict exit protocols. We buy fear and sell euphoria—entering when the street is fearful and rebalancing out when the cycle tops out. This portfolio is intended for investors with a high risk appetite.
