Our Investment Approach

Diranko Capital's Opportunistic Deep Value strategy follows a value investing approach inspired by Benjamin Graham and Warren Buffett, focusing on long-only investments in publicly listed equities. We treat every stock as a partial ownership stake in a real business, and only invest where we can understand that business well enough to conservatively bound what it is worth.
Our process starts with a systematic screen of roughly 55,000 publicly listed companies, but screening for cheapness is only the entry point. Every idea that survives is underwritten through one of three repeatable paths: 
  1. Businesses priced at a deep discount to their replacement value or earnings power today
  2. Corporate actions like spin-offs, liquidations, restructurings with an outcome largely independent of the broader market
  3. Small, emerging companies with a highly certain multi-year growth runway, led by a proven operator.
What ties all three together is the same discipline: We pay for a business, not a story, and only at a price that leaves us room to be wrong.
This process narrows the universe down to a focused, concentrated portfolio of 10-15 investments.

  • 1. Publicly Listed Equities

    Historically, equities have offered the highest risk-adjusted returns over the long term. The higher liquidity of listed equities, compared to private equity, provides better flexibility for investors.

  • 2. Global Scope

    Global diversification helps mitigate country-specific risks. Shifting exposure from overvalued markets to more attractively priced ones offers the potential for excess returns while simultaneously reducing risk.

  • 3. Small-Cap Companies

    Small and micro-cap businesses are more likely to be mispriced, since size and liquidity constraints keep most professional investors out of them entirely.

    We focus on companies with a market capitalization typically under 1 bln €, our portfolio has averaged approximately 150-250 mln €, well below the range most institutional capital can access.

  • 4. Quality Businesses

    Investing only in viable businesses, ones that can earn at least their cost of capital over time, lowers the risk that matters to us:

    Permanent loss of capital.

    We do not avoid price volatility; we treat it as the mechanism that creates our entry points, and often buy businesses precisely when the market has temporarily marked them down the most.

  • 5. Margin of Safety

    We buy at a large discount to what we conservatively believe a business is worth, anchored either to its normalized earnings power or to the cost a capable operator would face to replace what it owns, whichever is more conservative.

    This produces an asymmetric bet by design: the upside comes from the earnings power of the business if our analysis is right, and the downside is protected by the value of its asset base if we are wrong.

  • 6. Concentrated Portfolio

    Focusing on the best opportunities increases the potential for outsized returns.

    Our target portfolio of 10-15 companies, each sized to reflect our conviction, ensures sufficient concentration to matter while still diversifying away company-specific risk.

How We Underwrite Every Idea

Beyond price, we look for evidence that something is changing.
Markets price the recent past; the sharpest opportunities emerge where the past is about to stop predicting the future, an industry consolidating as weak competitors exit, a company's first-ever buyback or dividend, a new management team with a capital-allocation track record, or meaningful insider buying.
None of these is required, but we actively look for them in every idea, because a cheap stock with a catalyst is a stronger setup than a cheap stock alone.
We underwrite every position on a three-year horizon and hold ourselves to a demanding, consistently applied return hurdle before committing capital. 
We do not build our valuations on long-dated cash-flow projections, we underwrite what we can reasonably expect a business to earn over the next few years, at a price cheap enough that being right about that is sufficient.

Invest Alongside Us

Through our collaboration with Balance Wealth Management, we offer managed accounts for both U.S. accredited and retail investors.

Please use our contact form to learn more.

Reach out to learn more

If you want to learn more about our Opportunistic Deep Value strategy, explore our investor letters or reach out to us via the contact form.

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