• We believe, the most critical aspect of investing is EXIT. Finding the right investment is easier than riding that investment thesis.
• Typically, at the time of initiating a call, with our investment thesis, we set an exit price based on estimated financial performance as well as assumptions on valuation.
• On a quarterly basis, we evaluate whether the investment thesis is intact. If the answer is negative, we re-evaluate our estimates and assumptions and tinker with exit price.
• Often share prices move very aggressively, in such situations, we evaluate the implied IRR or the upside potential over the time period in which the investment thesis will play out.
• In either of the situation, if the return potential doesn’t match with our requirements, its time to hit the SELL button either partially or completely.