Helios India Long/Short Fund

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Category AIF Category III

Company Helios India Long/Short Fund

Fund Managers Dinshaw Irani, Mr. Abhay Modi

The parent company of Helios is Helios Capital Management Pte. Ltd. (“Helios”), situated in Singapore. Helios is registered as a foreign portfolio investor with the Securities and Exchange Board of India and holds a capital markets services licence from the Monetary Authority of Singapore. The 2005-founded Helios manages a worldwide long-only fund and long/short, and long-only funds/mandates specifically focused on India. The founders of Helios, Dave Williams, Karan Trehan, and Samir Arora, were pioneers in the Indian asset management market and jointly established one of India’s first private sector AMCs in 1994. They have extensive expertise in senior asset management (in their prior roles). In the Indian fund management industry, Samir Arora has one of the longest track records (26+ years on the long side). With a track record of more than 15 years, he is among the most seasoned India fund managers on the short side. Senior staff from Helios and Helios India have been closely collaborating for more than ten years, and we anticipate continuing this relationship for a very long period. We have the most extensive cumulative experience investing in India among alternative funds, and more crucially, we have remained solidly together throughout periods of market volatility in India. We are united by our common conviction that India has a fantastic stock market and our unwavering confidence in our ability to provide investors with competitive returns underpinned by complete transparency.

Fund Snapshot

Nature of the Scheme	Open-ended Category III AIF
Fund Manager:	Dinshaw Irani / Abhay Modi
Minimum Capital Commitment:	INR 1 Crore
Top Up	25 Lacs and in multiple of 5 Lacs
Lock-in Period:	3 Months
Exit Load:	Upto 3 Months – Lock-in, >3 months upto 15 months – 1% of NAV
General Range of net (Long-Short) exposure:	30% to 90%
General Range of Gross (Long + Short) exposure:	75% to 175%
General Range of Long side exposure:	60% to 120%
Range of Short side exposure:	10% to 60%
Number of longs: 30-50:	Number of individual stock shorts: 15-25
Performance Fees:	15% without catch up
Trustee Amicorp:	Trustees India Private Limited

Investment Philosophy

General Range of net (Long-Short) exposure: 30% to 90%
General Range of Gross (Long + Short) exposure: 75% to 175%
General Range of Long side exposure: 60% to 120%
Range of Short side exposure: 10% to 60%

Short Positions

The fund’s primary strategy will be too short individual stocks on India’s highly liquid futures markets.
In contrast to long portfolios, which could have sector biases, shorts will be sector-neutral.
Positions will normally be kept for three to twelve months for single stock futures selected from the bottom up.
In most cases, the fund will hold 15 to 25 positions, each with a weight of 1.0% to 2.0%.
Most common factors for shorting:
- High/unsustainable leverage
- Regulatory developments
- Price-based competition
- Expected disappointments in earnings
- Declining growth at very high valuations
- The overhang of government divestment etc

Portfolio Construction

Consider investing in subjects that exhibit “Non-zero-sum competition” with relatively low penetration, competition with government-owned firms, significant tailwinds, and a long runway for secular growth
Even while 10-15% of the portfolio may not (at any moment) be in favoured themes, it should nonetheless provide value or a trigger
Two tiers of rejection The whole cosmos is first condensed to the “Helios research universe.” To reach the list of “stocks that cannot be rejected on any factor,” the second level of rejection is performed within the “Helios research universe.”
Further bottom-up analysis to arrive at a “to OWN” list
Valuation philosophy:

The robust portfolio needs to have 2 kinds of stocks:

High confidence in reasonable returns
Reasonable confidence in high returns

Number of longs: 30-50; Number of individual stock shorts: 15-25

Portfolio Restrictions

Liquidity restrictions for at least 60% of the portfolio
Portfolio: with at least six different industries represented, Maximum industry weight of 35% (cash positions + net of futures contracts) of net assets; maximum weight in one stock of 10% (in practise less than 7.5%).
Short exposure: Mostly through futures on a single stock. Using options sparingly or selling indices/sub-indices
General Gross exposure range: 75-175%
General Net exposure range: 30-90%
Maximum exposures allowed: Gross: 200% & Net: 150%

Short Positioning:

The fund’s primary strategy will be shorting individual companies on India’s extremely liquid futures markets.
In contrast to long portfolios, which might have sector preferences, shorts will be sector-neutral.
Positions will typically be held for three to twelve months for single stock futures selected from the bottom up.
In most cases, the fund will hold 15 to 25 positions, each with a weight of 1.0% to 2.0%.

Investment Risk Control

Diversification among industries, across the capitalization spectrum, and in terms of growth and value can lower the risk from any one factor
Limits on a person’s exposure to stocks are 10% of net assets for long holdings and 4% of net assets for short positions. No additional investment should be made in long holdings over 7.5% and short ones over 3%-3.5%.
Top 250 companies with “liquid” trading volume over the previous six months
No new investments may be made in stocks that are not deemed to be “liquid” up to a maximum appreciation of 50% based on the performance of the group. Investment in each of these stocks is limited to 4.0%, with a maximum increase of 6.0% depending on performance.
Underperforming stocks are continually reviewed, but there are no formal stop-loss rules.

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