VP’s Investment Philosophy
At Verma Partnership, we focus on investing in stable, reliable businesses that operate in industries with slow rates of change. We believe change often brings uncertainty, which can be risky for investments. By focusing on stable, reliable businesses, we minimize surprises and protect our capital.
We look for companies that are undervalued by the market but have strong fundamentals and lasting competitive advantages. Whether it’s a trusted brand, a cost advantage, or a unique position in the market, these qualities act as a moat, safeguarding the business from competitors and ensuring their long-term success.
Our approach involves buying businesses at prices significantly below their intrinsic value. We firmly believe that minimizing downside risk by purchasing at a steep discount allows us to benefit from substantial upside potential, even if future outcomes are less favorable than anticipated.
Warren Buffett explains in his 2007 letter a clear framework for distinguishing between businesses. He categorizes them as great, good, and gruesome. Great businesses deliver high returns on invested capital and require minimal additional investment to sustain growth. Good businesses, while profitable, require consistent reinvestment to maintain or grow their earnings. Gruesome businesses, however, demand significant capital but generate minimal returns. We apply this framework to focus on companies with long-term sustainable competitive advantages, ensuring our investments align with these guidelines from Buffett.
When we find opportunities where the odds are clearly in our favor, we invest decisively. We prefer making a few large, thoughtful investments rather than diversifying.
Our goal is not to follow trends but to act with our own independent thought and not necessarily by following someone else. Market is a very egoistic place and everyone has an opinion about the stock market but only a few people are right. Especially, when others are acting impulsively.
By staying focused on these principles, we aim to build lasting value for ourselves and our investors.
For prospective investment opportunities or questions, you can contact us at divyanshu@vermapartnership.com
VERMA PARTNERSHIP 