Green Lantern Capital Growth Fund

Fund Snapshot

Fund Overview

The Green Lantern Capital Growth Fund is designed to generate superior risk-adjusted returns across varying market conditions by strategically investing in mid and small-cap companies. This fund aims to provide investors with an opportunity to participate in high-growth businesses that demonstrate strong fundamentals, industry leadership, and the potential for healthy return on equity (ROE).

Ideal for long-term investors with a 4 to 6-year investment horizon, the fund focuses on building a portfolio of companies that not only exhibit robust financial performance but are also trading at a high margin of safety.

Investment Philosophy

Quality companies in growth markets:

• Strong franchises + good/ethical management
• Large market opportunities, strong competitive characteristics and high ROE
• Industry leaders
• Hunger for growth

Risk-conscious approach:

• Valuation Risk
• Earnings Risk
• Balance Sheet Risk
• Over-ownership risk

Flexible Approach:

• Combine top-down and bottom-up approach
• Capitalizing on occasional tactical opportunities
• Ability to use cash as a hedge

Green Lantern Capital Growth Fund Overview

The fund strategy endeavours to generate superior risk-adjusted returns, in varying market conditions, by investing in Mid & Small Cap companies. Ideal long-term investment (3-5 year Horizon) option for investors where They build a portfolio of companies that are Industry leaders, have the potential to generate healthy ROE and are trading at a high margin of safety.

• Portfolio Structure
  • Large Cap – 0—30%
  • Mid & small Cap—70 -100%
• Number of stocks: 20 – 25
• Cash: Default Position
• Benchmark: BSE Small Cap Index

Portfolio Structure

The fund comprises a carefully curated selection of 20 – 25 stocks, ensuring diversification and optimal risk management. The default cash position is maintained for strategic flexibility, and the fund follows the S&P BSE 500 TRI benchmark for performance evaluation.

Market Cap & Sector Allocation

The fund’s investment strategy is well-diversified across various market sectors to optimize growth potential. The asset allocation is as follows:

• Cash: 53%
• Large Cap: 13%
• Mid Cap: 8%
• Small Cap: 26%

The sectoral allocation is strategically distributed across key industries:

• Agriculture: 4%
• Power & Infrastructure: 6%
• Pharmaceuticals: 7%
• Consumer Goods: 9%
• Financials: 12%

By investing in this fund, investors gain access to a well-balanced portfolio that capitalizes on emerging market opportunities while maintaining financial prudence.

For more details on our investment approach and strategy, get in touch with our expert advisors today!

Strengths: Investment is as much about psychology as about economics

• Deep understanding of global macro-economics and domestic businesses and promoters.
• Right temperament for riding the winners, realizing the full potential of our investments
• Being greedy when others are fearful and being fearful when others are greedy
• They are not compulsive investors
  • They only deploy capital when They find favourable Risk-reward
  • Favourable evaluations in terms of Margin of Safety
  • Do not hesitate to hold cash, if They don’t find ideas that fit our criteria.
  • They also, take cash off the table, once They get the expected returns much sooner than anticipated, and do not take execution risk.

Expecting a volatile 2022 – 23

• The year started with 6 – 7% inflation, which increased to 8-9% in the developed world a negative real rate of -5.5%
• USA Fed proposed a policy response to contain inflation through tapering, multiple rate hikes and shrinking B/S.
• They expect –
  • Commodity-led inflation (especially metals) should recede from Q3 CY 2022 both in terms of actual prices & also base effect as the world economy opens from COVID-19 lead restrictions.
  • Supply chains including shipment-related bottlenecks to start easing from Q2 CY 2022 & normalize in H2 CY 2022.
  • However, energy and Agri/food cost to remain elevated over the next few years until new supply capabilities are created globally
  • Also, with current geopolitical events, overall inflation may remain elevated than the targeted 3% by end of CY2022.
  • Expected multiple interest rate hikes by FED may take a breather in line with moderating inflationary pressure by H1 CY 2023
  • Across the world, trust in governments. & Central Banks are coming down over COVID-19 & inflation management.
  • The above will result in volatility across asset classes including bonds, Real Estate and Equities.

• However, with current geopolitical events and the factors above, They believe global bonds and equity as an asset class will remain under a downward bias with very high volatility.
• They expect some countries to postpone the carbon neutrality goalpost & increase the use of fossil fuels & commodities shortly.
• There should be a shift in demand from consumption towards services in CY2023.