Science of Alpha from Safety

About Us

OmniScience Capital is a top-ranked*, All-IITian, Ivy League, Graham-Buffett style, scientific value investing team managing investments in global listed equities including US, Europe and India catering to HNWIs, Family offices and Institutional clients. *This team’s investment strategy was ranked #1 in long-bias equity strategy across the World among more than 11000 hedge funds. (Source: Preqin Hedge funds ranking 2015)

OmniScience has developed a unique investment framework – Scientific Alpha, which is a combination of the value investment philosophy of Benjamin Graham and Warren Buffett with the rigorous scientific approach of Nobel prize winners, such as, Eugene Fama and Robert Shiller.

Scientific Alpha has proved to outperform the respective benchmarks and active fund managers of the mutual fund or hedge fund variety across global equity markets. OmniScience provides ETN/Structured Notes, Separate accounts and Institutional Advisory Services to Asset managers and institutions.

Team Scientific Alpha

Dr. Vikas V. Gupta

CEO & Chief Investment Strategist

  • Vikas is the inventor and architect of the Scientific Alpha concept. He espouses a value-oriented investment philosophy, in the mold of Graham-Buffett.
  • He has 20+ years of experience in research, strategy and operations in various Founder/Entrepreneur/CxO-level roles.
  • Previously at ArthVeda he worked in a corporate strategy and investment role in the private investment arm of the DHFL group—Wadhawan Holdings Pvt. Ltd. (WHPL).
  • Vikas is a regular columnist at various print and online publications including The Street (USA), Mint (India), and Moneycontrol (India)
  • He formerly served as Professor and research faculty at IIT Kharagpur and University of California, Irvine. He has a B.Tech from IIT Bombay and earned his Masters and Doctorate from Columbia University, New York.

Ashwini Shami

Portfolio Manager

  • Ashwini is managing portfolios, devising asset allocation and investment strategies.
  • He also leads the investment research and is instrumental in providing research inputs and investment insights.
  • He brings in more than a decade of experience in the financial services industry. Earlier he was working with Goldman Sachs as equity research analyst. His expertise lies in developing investment strategies to harvest returns by focusing on intrinsic business value and identifying pockets of mispricing.
  • He has a B.Tech and M.Tech from IIT Bombay and earned his MBA from IIM Lucknow and Toulouse Business School, France.

Varun Sood

VP Investment Research

  • Varun is devising, rigorously analyzing and evaluating structured investing strategies.
  • He brings in nearly a decade of quantitative experience and a scientific approach to the value-chain of investment strategy design, development and management. Previously, he has worked at ING and Masan group .
  • He has a B.Tech from IIT Roorkee and earned his MBA from IIM Bangalore and EDHEC School of Business, France.

Kishore Naidu

Senior Advisor

  • Kishore’s natural expertise lies in crystallizing strategic frameworks which can power organizational growth through organic and inorganic pathways.
  • He brings to OmniScience Capital more than 20 years of experience in leadership roles in strategy, investor relations, branding & marketing, working with blue-chip companies across sectors, such as, consumer goods and services, infrastructure and real estate. Recently, he has been providing this experience to startups helping them power strategic growth accompanied with building durable competitive advantages.
  • Kishore is an alumni of INSEAD, France, Abertay University, UK and University of Mumbai.

Hakim Taj

VP Investment Solutions

  • He has global exposure and has worked with Citigroup in Mumbai; Valartis Group in Vienna; and Progress Partners in Boston in investment banking.
  • He has also assumed different roles of corporate strategy and business development in various organizations, and advises early stage ventures as well in his individual capacity.
  • He holds a business degree from Thunderbird School of Global Management, Arizona.

Investment Philosophy

OmniScience Capital—Science of Alpha from Safety

Classic Value Investing: Graham-Buffett style Discount to Intrinsic Value

The investment philosophy of OmniScience Capital rests on the concept of alpha from safety. If a stock’s intrinsic value is $100 but if it is available in the stock market at $70 or less, then a margin of safety of $30 exists in the investment. Eventually when the value reaches back to the intrinsic value the total return is the market return, i.e. beta, and a pure excess return of $30, i.e. alpha, on top of it. This is classic value investing in the mould of Benjamin Graham and Warren Buffett.

The amount of alpha is precisely equal to the margin of safety. This is alpha from safety. The embedding of safety in every investment and the eventual unlocking of it in the form of alpha consistently is the Science of Alpha from Safety. OmniScience Capital passionately and persistently devotes itself to understanding, applying and contributing to this Science.

Next Generation Value Investing: Scientific Value Investing

OmniScience Capital OmniScience Capital has developed a framework—the Scientific Alpha Framework—which is based on mitigating fundamental risks which can erode capital. The process is similar to what a stringent credit analysis attempts to do to avoid loss of capital.

  • The most important requirement is the stability of business which mitigates the business risk and prevents losing money because the business was weak.
  • The second requirement is that the balance sheet is strong, i.e. not over-leveraged, thus mitigating the twin risks of near-term default and the risk of bankruptcy in the long-term.
  • The third requirement is a proven track record of value creation, which mitigates the risk of future cash flows being reinvested in value destroying projects.

A company that satisfies all these requirements, i.e. has a stable business model, has a strong balance sheet, has a value creating track record is a high quality, moat company.

The final requirement in locking in safety is not to pay too much for a moat company. The requirement of discount to intrinsic value for these moat companies is what results in investment grade equity. These are moat companies which are available at a discount to intrinsic value.

A portfolio of companies chosen from this pool of investment grade equity is likely to deliver alpha in the long run.

Intrinsic Value

A basic thumbrule to understand businesses and valuations is that, in a competitive economy, most companies can generate returns which are equal to or barely higher than the cost of capital.

This means that the assets on the books of the companies are valued appropriately at the carrying cost. There can be exceptions but they are likely to average out across a large group of companies.

Companies with large leverage, then are primarily owned by the creditors and lenders to the extent of the leverage. Any errors in estimating the correct value of assets is bound to impact the equity holder and eat into their share of the assets in favor of the lenders and creditors. Typically, the equity of these companies do not carry any margin of safety. Rather, the equity provides a possible margin of safety to the lenders and creditors. The debt paper–the senior, the better–when available at a significant discount provides a good avenue for investments in the hands of expert value investors.

For most equity investors, highly leveraged companies are not suitable investments.

The safely leveraged, or ideally, cash-rich, companies are suitable grounds for investments for most equity holders. Within them most companies are appropriately valued at their reproduction cost. Reproduction cost, is the asset values adjusted for land-price appreciation, inflation and intangibles, such as R&D, patents, technology expertise, learning curve, other know-how, brand value and trademarks, and know-who, i.e. customer relationships, government relationships, banking relationships and supplier relationships, employer brand value among others.

Reproduction costs are likely to be in excess of carrying costs and can be estimated conservatively.

A small group of exceptional companies can generate premium returns over the cost of capital. These are the companies which are likely to have significantly more value than their stated book value. These are what Buffett calls moat companeis. They have a competitive advantage which results in their generating higher returns than the cost of capital.

A subset of these companies are extraordinary companies. These companies have a durable moat, i.e. sustainable competitive advantage and also growth opportunities and management with capabilities to exploit those opportunities while maintaining the competitive advantage.

These companies are moat companies with growth. These intrinsic value of these companies can be much higher than the book value. However, in a majority of the cases a huge premuim ensures that the returns to investors willing to pay these premiums is in line with markets and not significantly higher.

Scientific Alpha framework attempts to creating an investment grade equity portfolio of growing, moat companies at a significant discount to their intrinsic value, thus generating alpha from safety.

Alpha is precisely this Return on Safety.

ETN

OmniScience Capital launching a series of Scientific Alpha for strategic allocation products and thematic allocation products. These are primarily in the form of Delta One tracker structured notes also know as Actively managed certificates (AMC).

The first two products from this series are:

  1. Strategic Asset Allocation Series: Greatest Investor Portfolio (GIP):
    • A structured value investing strategy based on the discount to intrinsic value weighed Scientific Alpha framework applied to the universe of publicly listed stocks held by Warren Buffett’s Berkshire Hathaway.
    • The universe consist of companies that have been bought by Buffett and can be termed Buffett Grade Equity. These companies belong to the pool of highest quality businesses and bear not only the stamp of Buffett but have his money in them.
  2. Thematic Asset Allocation Series: Global Security Sector (GLOSEC)
    • A structured value investing strategy of 25 equal-weighted, most undervalued, high quality Security Sector stocks in risk-mitigated & alpha generating Scientific Alpha framework
    • The universe consist of global developed world companies whose core business is security, including defence, weapons, aerospace, cyber-security, biometric products and services, including Original Equipment Manufacturers (OEMs) for such firms.

Investment Solutions

Institutional Client Services

OmniScience Capital provides research, consultancy and investment solutions to institutional clients including institutional investors, as well as, other asset managers. Depending on the needs of the clients, OmniScience develops specific solutions which address the risk, return, liquidity, income and investment time horizons of the clients to deliver optimal investment strategies.
OmniScience Capital provides strategic asset allocation and thematic asset allocation expertise as well.
OmniScience Capital’s Scientific Value Investing methodologies provide a highly liquid, large capacity, alpha-renerating strategies suitable for providing instutional exposure to developed and emerging markets.

Family Office Services

OmniScience Capital specialises in providing bespoke Investment solutions to single family offices. We work closely with the investments team right from drafting the Investment policy statement (IPS) to providing Investment products & services to execution support.

Analysis and review of the existing portfolios and how to restructure them in line with the IPS is an integral part of the services.

HNWI Client Services

HNWI Clients can benefit from the Scientific Alpha framework of OmniScience Capital. Several strategies from OmniScience might be suitable for clients for taking exposure to various equities asset classes from a strategic asset allocation point of view. Further, several of the thematic allocation strategies from OmniScience provide exposure to emerging, sunrise sectors which are expected to become the important sectors of the future global economy and capital markets.

Contact Us

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OmniScience Capital
7A, 7th Floor, Nucleus House
Saki Vihar Road,
Andheri (East),
Mumbai 400071,
Maharashtra,
India
Mobile: +91 9987681967 | +91 9892140540
Tel: +91 22 28583750/51
E-mail: info@omnisciencecapital.com

Disclaimer

Past performance is not necessarily indicative of future results.

Omniscience Capital Advisors Private Limited (Omniscience Investment Advisers) is a Registered Investment Advisory firm with SEBI-registration no. INA000007623. Equity investments are subject to market risks. Please read all related documents carefully. An investor should consider the investment objectives, risks, and charges & expenses carefully before taking any investment decision. This is not an offer document. This material is intended for informational purposes only and is not an offer to sell any services or products or a solicitation to buy any securities. Any representation to the contrary is not permitted. Omniscience makes no warranties or representations, express or implied, on the products and services offered. It accepts no liability for any damages or losses, however caused, in connection with the use of, or on the reliance of its product or services. This document does not constitute an offer of services in jurisdictions where the company does not have the necessary licenses. This communication is confidential and is intended solely for the addressee. This document and any communication within it are void 30-days from the date of this presentation. It is not to be forwarded to any other person or copied without the permission of the sender. Please notify the sender in the event you have received this communication in error.

All calculations, estimations, projections in this document are theoretical and hypothetical and could have errors. These do not represent any real returns. Real investments could have substantially different returns.

 We may have recommended stocks, or stocks in the mentioned sectors to clients, including having personal exposure.