OUR INVESTMENT METHODOLOGY
“Diversification is only a surrogate, and usually a poor surrogate, for knowledge, control and price consciousness.”
— Marty Whitman
We build concentrated, high-conviction portfolios made up of a few exceptional businesses — not hundreds of scattered bets. We believe fewer, better investments — bought with care and held with conviction — outperform scattered strategies over time.
How We Buy: A Disciplined Four-Step Process
“The greatest investment decisions come not from spreadsheets, but from understanding people, markets, and long-term trends.”
— Philip Fisher
At Shagun Capital, we believe superior investment outcomes stem from sticking to our principles and process with discipline. Our buying framework is designed to uncover rare, high-quality businesses and invest only when the odds are firmly in our favour.
1. Generating Ideas: Where Conviction Begins
We start by identifying businesses with enduring potential — not temporary popularity.
Our idea generation funnel is driven by:
- Being curious and open-minded in today’s fast-paced world
- Making an honest judgement if the business is simple enough for us to understandAnalyzing portfolios of super-investors, whose philosophy aligns with ours
- Studying mega trends and value migration shifts
This helps us surface industries and businesses that we understand and have deep intrinsic strength.
2. Stringent Filtering: Turning Possibilities into Probabilities
- We then apply rigorous filters to narrow our focus:
- What is the source of its edge over competitors, and how durable is the moat?
- Have we stress-tested the story across cycles and scenarios?
- Are we dealing with a high-integrity, high-competence management team?
We continuously reassess every thesis, and we aren’t afraid to walk away when facts change.
3. Building the Target List: Preparing Before Acting
Only after deep, ongoing research do we add to companies on our watchlist of high-conviction targets. Each potential investment on this list is a high quality business with unique management strengths. Our watchlist is always kept current through a disciplined process of reassessing its merit on a continuous basis.
This process ensures we’re not scrambling when opportunity knocks — we’re ready.
4. Executing with Patience and Precision
We’re never in a hurry. We may wait months or even years for the right entry price. But when it arrives, we act with full confidence, irrespective of market moods.
- At the outset, we aim for 5x to 10x potential over a 10-year horizon
- Once we have invested, we keep an extremely close watch on each of the stocks in our concentrated portfolio
- We monitor performance and market signals continuously without micromanaging or reacting emotionally
Shagun Capital’s principle remains unwavering:
“Buy the best, or do not buy at all. Always look for compounding machines.”
When Do We Sell
“The Stock doesn’t own you, you own it.”
— Warren Buffett
Selling, for Us, Is Strategic — Never Emotional
At Shagun Capital, we sell only when there’s a clear, rational reason to do so — never due to market noise or short-term price swings.
We consider exiting when:
- The thesis changes: New facts emerge or earlier assumptions no longer holdBetter opportunities arise:
- A business with stronger long-term potential comes into view
- Valuations overshoot: When the price significantly exceeds intrinsic value and further return potential shrinks
Discipline in exits is key to protecting capital and compounding it wisely.
How We Form Our Investment Opinions
“It’s simple, but not supposed to be easy. Anyone who finds it easy is stupid.”
— Charlie Munger
Independent Thinking. Ground-Level Research. No Shortcuts.
At Shagun Capital, we don’t follow screens, technical charts, or headline-driven metrics.
Our investment opinions are built from the ground up — with curiosity, rigour, and long attention spans.
How we study
We form our views through a hands-on, immersive approach:
- Understand the product or service: what it does, how it works, and how it solves real problemsWherever possible, engage with people who interact with the business — customers, suppliers, dealers, even former employees
- Study 5–10 years of annual reports, investor presentations — for both the company and key competitors
- Listen to earnings calls and track what management says versus what they deliver
“A lot of success comes from knowing what to ignore, and when to just sit and think.”
— Charlie Munger
What This Means for You
This method takes time — but it leads to deeper insights, more durable conviction, and better decision-making.
We don’t follow the crowd. We attempt to be different, and better. We follow the work.
Because in investing, what’s easy rarely works — and what works is rarely easy.