Marcellus Investment Managers has updated its Consistent Compounders Portfolio (CCP), highlighting Astral and Divis Laboratories as key performers. The firm has reduced large-cap exposure to 51% while increasing bets on healthcare and export-led manufacturing.
Marcellus Investment Managers is restructuring its flagship Consistent Compounders Portfolio (CCP) by moving away from its long-held preference for large-cap consumption, financial, and IT stocks. The portfolio, which currently holds 19 stocks, has seen a significant shift in its composition as the firm prioritizes companies involved in healthcare, pharmaceutical exports, and specialized manufacturing.
Strategic Shift in Portfolio Holdings
A central change in the portfolio is the reduced reliance on large-cap companies. Three years ago, large-cap stocks accounted for more than 80% of the CCP; this figure has now fallen to 51%. In their place, the firm has increased its focus on what it terms 'enterprising compounders.' These are companies that reinvest the vast majority of their cash flow—often 80% to 100%—back into their businesses to grow their competitive advantages and fund new ventures.
Astral and Divis Laboratories have emerged as notable contributors to the portfolio’s recent performance, joining Eicher Motors as top holdings. This reflects the firm's broader rotation into healthcare, which now represents approximately 25% of the total allocation, and non-IT export manufacturing, which accounts for another 20%. Notably, the portfolio has exited the IT services sector entirely and increased its stake in two internet-based companies following recent price corrections.
Impact on Earnings Growth
The firm reports that this strategic shift has been reflected in the portfolio's earnings performance. The weighted-average year-on-year earnings per share growth for the companies held in the CCP has shown a steady upward trend over the last four quarters. According to the firm, this growth accelerated from 10% in the first quarter of fiscal year 2026 to 22% in the fourth quarter.
This improvement in earnings quality is a key monitorable for investors. While the portfolio remains concentrated, with more than 40% of its total capital invested in its top five positions, the broader research coverage has doubled. This suggests the fund is looking for growth outside of its traditional large-cap base, focusing instead on sectors like power transmission, auto ancillaries, and fast-fashion retail.
Investors looking at this transition may want to monitor whether the portfolio’s new focus on smaller or mid-sized 'enterprising compounders' can sustain the higher earnings growth rates reported in recent quarters. As the portfolio moves away from established large-cap consumption plays, its performance will increasingly depend on the successful execution of capital reinvestment strategies within the healthcare and export manufacturing segments.