Our First Letter to You: Arbor Investment Advisor
Dear Subscribers,
Thank you for trusting Arbor Investment Advisor with something as personal as your capital. This first letter is simply an insight into how we think, how we approach portfolio building and risk management.
“You are not going to get rich renting out your time. You must own equity — a piece of a business — to gain your financial freedom.”
— Naval Ravikant
I keep this line close because it is simply true. Look around, and almost everyone who has built lasting wealth has done it by owning businesses — either by starting one or by owning equity in good ones — not by drawing a salary for forty years. Even a piece of land your relative owned that rose in value was an asset someone owned. Owning the right businesses, patiently, is the most reliable path most of us have.
Why I do this
I have been curious about investing for over a decade, and the curiosity has never faded. I read widely and across fields — biotechnology, investing, philosophy and psychology. Every business has its own little world, with its own drivers, moving parts, competitive dynamics and environment. There is always more to learn, and I can read about businesses all day without feeling tired. In short, I like what I do. This is my passion, and over the years that same passion has quietly compounded my own capital as well.
That passion is anchored to a measurable objective and a simple goal.
My objective is to beat the Nifty 500 consistently on a rolling three-year basis.
My goal is to help you on your own journey to financial independence. Everything below serves those two lines.
How we think about investing
We follow a barbell approach, in the spirit of Nassim Taleb — deliberately combining safety on one side with asymmetric upside on the other.
On one side sits the majority of the portfolio: good and great businesses bought at reasonable valuations, run by decent management teams, where we are convinced of a tailwind or a clear reversion to the mean. Each has a defined thesis and identified levers we expect to play out over one to three years or longer. These are the compounders. We expect them to grow earnings at roughly 10–20% a year, though not linearly. Because conviction is higher, position sizes are larger — typically 2–6% each.
On the other side is a tail of smaller, higher-optionality positions: deeply cyclical names, turnarounds, or special situations etc where the trigger, if it plays out, can deliver 2–5x in one to three years. These carry more risk, so they are held in smaller sizes (1–3% each) and in greater numbers. They demand nimbleness — we must be willing to exit quickly if the thesis breaks. As a thesis plays out, we let the position size grow to capture the upside.
“Heads I win; tails I don’t lose much.”
— Mohnish Pabrai, on asymmetric bets
Together, the two sides act like defence and offence pulling toward the same goal. Every business, on both sides, is put through a rigorous checklist. The point of the checklist is simple: minimise mistakes, avoid accidents in the portfolio, and above all, try not to lose money.
We constantly work to improve our investment process and risk-management framework so that the quality of our decisions keeps improving.
Portfolio Construction
Using the philosophy mentioned above, we group holdings into sectors and cap concentration so that no single sector dominates the book. In most cases the maximum value in any one sector stays around 10%, breached only in exceptional circumstances. The result is a portfolio diversified across many sectors, but never so diffuse that good ideas stop mattering.
You will notice in the table below that the target weights sum to more than 100%. That is deliberate. Not every company is meant for every investor. Depending on your risk profile — conservative, balanced or aggressive — you receive the subset of recommendations that fits you. The full menu therefore adds up to more than 100%, while any individual portfolio does not.
Sector snapshot (current recommendations)
Weights are indicative of the full recommendation set across risk profiles; individual portfolios differ.
Portfolio performance
Since inception on 1 December 2025, the model portfolio is up roughly +25% (realised and unrealised positions combined) and has generated approximately +24% excess returns over the Nifty 500 across the same period. This is a short window of roughly eight months. We caution strongly against annualising it or reading it as a promise. It is simply where we stand today.
Our current view on the macro
This section matters more than usual right now, so we will be specific.
Global liquidity, debt and the cost of capital
Since 2008 — and far more aggressively after 2020 — the world’s money supply expanded dramatically on the back of near-zero interest rates and loose credit. US M2 has roughly tripled from about $7.7 trillion in 2008 to a record near $23.2 trillion (June 2026). That wall of liquidity, amplified by the yen carry trade, pushed capital into financial assets and especially into US technology. COVID accelerated the shift further.
In a simple DCF (Discounted Cash Flow), lower discount rates raise the present value of future cash flows. That is why the decade of cheap money inflated valuations across the world — and why rising long yields act as gravity on those same multiples. There was a time in the 1990s when Indian savers could earn 13% on an HDFC Bank fixed deposit. When risk-free rates fell toward 7%, capital naturally migrated toward equity in search of higher returns. Equity has delivered roughly 12% CAGR over the last two decades in India, and a similar migration of savings towards capital markets occurred worldwide. The result: investors became willing to pay more for each unit of earnings of businesses during a low-interest-rate regime.
At the same time, US public debt has climbed relentlessly and now sits around 123% of GDP — roughly double its 2008 level. Everyone knows a path like this is difficult to sustain, but nobody can time the exact peak.
Sources: Federal Reserve (M2); U.S. Treasury / FRED (debt & yields). Figures approximate.
Long-term yields in the US have been trending higher for several years and sit near multi-year highs (~5.2% on the 30-year, the highest sustained levels since 2007). Similar pressure is visible in the EU and UK. Higher global yields eventually influence yields demanded by bond investors for Indian bonds as well. The era of ultra-cheap money appears behind us. We should be prepared for a world in which the cost of capital would be structurally higher.
Energy, commodities and inflation risk
Geopolitical disruption in the Middle East has constrained refining and production capacity that cannot be restored overnight. Global inventories have drawn down sharply — OECD government stocks are at their lowest since 1990 and US petroleum inventories at levels last seen around 2004. The world has invested very little over the last decade in increasing the supply of oil and gas. Lower oil and gas prices did not meet the ROI filter of companies. We believe oil and gas prices are being held artificially low relative to the underlying fundamentals, and we expect energy to trade materially higher over the next year or so.
The result is broadening pressure across commodities:
Energy and derivatives — ATF, diesel and oil products
Agri inputs — soybean, wheat, fertilisers
Industrial inputs — sulphur and specialty chemicals etc
Many everyday products, including basic medicines such as paracetamol, begin with oil-derived raw materials. Cost pressures eventually reach petrol, diesel, cement, FMCG, medicines, cars and more. In an inflationary environment, cash sitting in the bank quietly loses purchasing power. The practical response is to own assets with genuine pricing power — businesses that can pass higher costs through to customers.
What this means for our portfolio
Our base case is elevated inflation — quite possibly periods of stagflation — followed by higher-for-longer interest rates that would pressure equity valuations globally. “When the US sneezes, the world catches a cold” remains a useful reminder.
Our response is practical rather than predictive:
Own businesses with pricing power and those that need little incremental capital to grow (high asset-turnover models) and have less demand destruction of their products/services due to inflation/interest rates.
Maintain a structural overweight in energy — oil, gas and coal — as both a hedge and a long-term theme. AI, data centres and EVs (electric vehicles) all consume power; reliable sources of energy will remain essential for years. We would not be surprised to see oil materially higher within the next twelve months.
Look for pick-and-shovel opportunities around electrification and the energy transition.
“When everybody is digging for gold, it’s good to be in the pick and shovel business. — attributed to Mark Twain”
The majority of the portfolio is already positioned along these lines. The barbell itself is designed for exactly this environment: enough durable compounders on one side to endure turbulence, and enough asymmetric optionality on the other to benefit when conditions change.
India’s domestic picture remains resilient
Against the global backdrop, India’s economy continues to stand out. After solid growth in FY26, the RBI projects real GDP growth of 6.7% for FY27 (Q1 7.0%, Q2 6.4%, Q3 6.5%, Q4 6.8%). Domestic demand, investment and services activity remain supportive even amid external uncertainty.
India real GDP growth — actual and RBI projection. Source: RBI.
Key macro indicators (latest available, early August 2026)
Sources: RBI Monetary Policy (August 2026), SIAM, MoSPI, Finance Ministry, RBI weekly data. Figures approximate and subject to revision.
We expect the next one to two years to be more turbulent than most. That is precisely what the barbell is built for: enough safety to endure the turbulence, and enough optionality to profit from it.
Your first multibagger: Sterlite Technologies
Our first big win for subscribers came from Sterlite Technologies — a deeply cyclical optical-fibre company, and the only Indian player with full backward integration from glass preform, which makes it among the lowest-cost producers in the country. We flagged it as a classic deep-value cyclical at around ₹97 and sized it at 2% of the portfolio, given a promoter group with a mixed record with minority shareholders and the inherent risk of a cyclical business.
For years, the business struggled with:
Huge debt weighing on the balance sheet
Sluggish demand
Persistent dumping from Chinese producers, leading to pricing pressure and thin margins
An EPC subsidiary that further deteriorated the financials
This was visible in the numbers from 2023 to 2025.
Then, slowly, the headwinds turned into tailwinds:
The company divested the EPC business whose financials were hurting it
Preform prices rose sharply, directly uplifting realisations and margins
Large data-centre orders and partnerships tied to the AI build-out
The promoter raised its stake and raised capital to wipe out debt
As Charlie Munger would call it, a lollapalooza — many positive forces arriving at once. The rate of change shows up directly in the numbers:
Q1 (June quarter) comparison — consolidated
Source: company filings (Screener).
The stock became roughly 6x in about six months. We exited in two parts — a quarter near ₹619 and three-quarters near ₹588 — delivering 2–5x for most subscribers depending on when they entered. Could it run further, to ₹900 or beyond? Perhaps. This selling decision may look average in hindsight. We are content taking a large, quick return and redeploying it into the next opportunity.
Shared as a case study in how fast a business’s fortunes can change when conditions change — not as a live recommendation.
Full research report:Sterlite Tech report
Case study: OCCL
The second example is a company we still hold, across both our special-situation and long-term portfolios, which clients accumulated below ₹95 over the last eight months. It shows the same idea from the other side — patience through a long, ugly down-cycle.
We have followed this business since 2017. It is effectively an oligopoly: the sole domestic manufacturer of insoluble sulphur in India (sold under the Diamond Sulf brand), one of only a handful of producers worldwide, with roughly 55% share in India and about 10% globally. Insoluble sulphur is used in small quantities to make tyres — a boring product whose volumes historically grew just 2–3% a year.
For years, one problem stacked on another:
Operating margins collapsed from the high-20s (~28%) in 2018 toward the mid-teens at the trough in 2024/25
Sales fell, profitability sank, and the stock lost roughly half its value
Global over-capacity in insoluble sulphur
Sulphuric acid — a commodity by-product — dragged down margins and ROCE
Weak automobile demand hit the core
Cash flow had earlier been diverted into startups and funds; investors read it as lost focus
A steep US tariff of 50% forced the company to absorb costs just to stay competitive
At the trough, the business was available at roughly 5–6× yearly operating cash flow — an implied cash yield near 16–20% versus the then ~7% risk-free rate on Indian bonds. In plain terms, the market was offering a far higher cash return on the equity than on a government bond, provided the cycle eventually turned.
Heeding investors’ feedback, the company demerged its investment arm into a separate entity, AG Ventures — but by then investor interest had drained away and the price kept sliding. Then the wheel turned again:
DGFT implemented anti-dumping on imports from China and Japan
GST rationalisation lifted vehicle sales → more tyres → more insoluble-sulphur demand
The punitive US tariff was cut sharply from 50% to 12%
Higher global shipping and insurance costs raised the landed cost of competing imports into India
Sulphur raw material spiked 80–100%; well-stocked, the company passed on higher prices
Its sulphuric-acid by-product also rose 80–100% in price due to shortages
Realisations on both product lines climbed together, and margins began to recover — another small lollapalooza.
Q1 (June quarter) comparison — standalone
Source: company filings (Screener), standalone figures.
The signal is hard to miss: in the June 2026 quarter, revenue rose about 79% and net profit roughly tripled year-on-year. That single quarter’s profit of ₹40 crore nearly matched the company’s entire prior-year (FY26) profit and comfortably exceeded all of FY25. As long as these tailwinds hold, the numbers should stay strong.
No investment is without risk.
Risks
Demand destruction or order deferment if sulphur prices stay elevated — tyre companies may wait for prices to normalise.
Auto sector sensitivity to interest rates — an RBI rate hike could soften vehicle demand and insoluble-sulphur demand.
High inflation and higher vehicle prices may lead prospective buyers to postpone purchases.
Delay in anti-dumping duty (ADD) implementation by DGFT.
Global manufacturers are compromising on margins and flooding India with cheaper insoluble sulphur.
Difficulty securing sulphur raw material if the Iran–US crisis escalates further.
Full research report: OCCL Report
Consider this just as a case study to identify the moving parts in a business and how a change in business variables can lead to swings in a company’s fortunes. This is not a buy-and-hold recommendation. Please consult your advisor before acting.
The objective of sharing this case study was to show the process when we look for asymmetric bets. We will keep learning and adapting to improve the process.
Feel free to subscribe for future investment letters and blogs at https://arborinvest.in/.
Warm regards,
Amandeep Singh
Founder, Arbor Investment Advisor · SEBI RIA Reg. No. INA000021225
IMPORTANT DISCLOSURES
Arbor Investment Advisor is a SEBI-Registered Investment Advisor (Registration No. INA000021225). Registration granted by SEBI, membership of BSE and certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors. This letter is for information and education only and is not investment advice, nor an offer or solicitation to buy or sell any security. The securities discussed are shared as case studies to illustrate a thinking process; they are not buy, sell or hold recommendations, and any specific recommendation depends on an individual’s risk profile and suitability. Investments in securities are subject to market risks; read all related documents carefully. Past performance is not indicative of future returns, and the performance figures cited are for a short period and should not be annualised. Please consult your advisor before acting on anything herein.
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