Green Lantern Capital Alpha Fund

Fund Snapshot

Fund Overview

The fund strategy endeavors to generate superior risk adjusted returns, in varying market conditions, by investing in large Mid Caps within a broad Multi Cap allocation strategy

Ideal long-term investment (4-6 years) option for investors to build a portfolio of market leaders with strong balance sheets, superior earnings growth and steady free cash flow generation.

The Green Lantern Capital Alpha Fund follows a structured allocation strategy, balancing exposure across large-cap (0-40%), mid-cap (20-60%), and small-cap (0-40%) stocks while maintaining a diversified selection of 20 to 25 stocks. A default cash position is kept as part of risk management, with the S&P BSE 500 TRI serving as the benchmark. In terms of allocation, the fund currently holds 43% in cash, 28% in large-cap, 15% in mid-cap, and 14% in small-cap stocks.

Investment Philosophy helps focus on:

• Asymmetric risk-reward
• Earning inflection points
• High margin of safety
• Growth: Faster for longer
• Disciplined selling: the most crucial part of investing
  • Run up in stocks & valuations getting rich
  • The significant change in investment rationale

Indian Macro – evolving secular trends

• Increased outsourcing of manufactured products from India as an alternative to China in textile, auto components, engineering goods etc.
• Outsourcing of pharmaceuticals, chemicals & IT/ITES to continue.
• Govt to continue to support private sector capex through PLI schemes.
• Increasing focus on Make in India – self-reliance for various products/components through PLI schemes, trade barriers/custom duties.
• Increased outsourcing and preference for domestic manufacturing in defence, railways etc.

Investment Approach

Business Selection: The starting point of any investment is to study and understand the business threadbare as they are business investors, which means investment to them is like buying a business. Green Lantern Fund invests in quality businesses that the fund managers understand well and which are likely to generate improvement in earnings and cash flows in the foreseeable future and avoid ones facing headwinds.

Judgement of Business cycles: The understanding of global macroeconomics along with the judgement of economic and business cycles helps them to endeavor to remain ahead of the curve in their investments. They may be a bit early in their investment and may have to wait for the businesses to bear fruit but have generally found them to be very rewarding with higher IRRs.

Margin of Safety: Being early in identifying themes/stocks allows them the ‘Margin of Safety’ that they require before they invest. This entails that they will not shy away from being contrarian provided they are able to identify triggers for improvement in earnings and/or rerating of sector/stocks.

Thus, Investing in quality, growing businesses with the desired margin of safety ensures capital

protection, lower volatility, and generate superior returns over a period of time.

Their Investment Principles are:

Quality Companies in Growth Markets

Risk Conscious Approach

Flexible Approach

Strengths: Investment is as much about psychology as about economics

• Comprehensive knowledge of domestic firms and promoters as well as global macroeconomics.
• Ability to ride the winners and maximise the returns on our investments
• Being terrified when others are greedy and greedy when others are afraid
• They do not engage in excessive investing
  • They only invest money when they uncover excellent risk-reward values that also offer a high margin of safety.
  • If they can’t uncover any ideas that meet our requirements, don’t be afraid to hang onto your cash.
  • Additionally, they stop taking execution risk if they receive the projected return considerably sooner than planned.

What to expect?

Do’s:

• Skin in the game
• Disciplined approach
• Rigorous research and due
• diligence
• Long term focus
• Capitalizing on low-risk tactical
• opportunities
• Transparency & regular
• communication

Don’ts

• Speculation
• Leveraged position
• Compromise with quality
• Investing for the sake of investing
• Benchmark hugging

The investment principles:

• Absolute return mindset
• The asymmetric risk-return approach
• Undiscovered/underperformed
• Disciplined approach to selling