Funds managed
| Fund name | Market cap focus | License |
| Helio India rising PMS | Theme based Multi-Cap Equity | PMS |
About
Helios, founded in 2005, currently manages both India focused long/short and long only funds/mandates and a globally focused long only fund.
Their parent is Singapore based Helios Capital Management Pte. Ltd. (“Helios”), holding a Capital Markets Services License from the Monetary Authority of Singapore and registered as a Foreign Portfolio Investor with the Securities and Exchange Board of India.
Helios Capital Management India LLP (“Helios India”) is licensed by Securities & Exchange Board of India to offer Portfolio Management Services (PMS). Our flagship investment product is the Helios India Rising PMS. PMS SEBI Regn. No. INP000006916
Key staff
Samir Arora – He is the main founder & fund manager at Helios Capital. He received his undergraduate degree in engineering from the Indian Institute of Technology, New Delhi in 1983 and his MBA (gold medalist) from the Indian Institute of Management, Calcutta in 1985. He also received a master’s degree in finance from the Wharton School of the University of Pennsylvania in 1992. He has total investing experience of 29 years. Linkedin
Dinshaw Irani – He is the Chief Investment Officer of Helios India. is a graduate in Commerce (Hons.) and holds a post-graduate diploma in Rural Management from the Institute of Rural Management, Anand. Dinshaw has total investing experience of 28 years. More about him
Abhay Modi – He is the Head of Research at Helios India. Abhay received his degree in engineering from NIT Rourkela and his MBA from the Indian Institute of Management, Ahmedabad in 1993. Abhay has a total investing experience of 26 years. More about him
Details of funds managed
| Fund name | Asset class | License |
| Helio India rising PMS | Theme based Multi-Cap Equity | PMS |
Inception Date: 16 Mar 2020
Number of Stocks: 30 – 35
AUM size: 198.52 ( in Cr. Approx.)
Benchmark: Nifty 500
Fund Manager Name: Dinshaw Irani
Fund Manager Experience Dinshaw Irani has India related investment experience of 28years (at Helios India (& Artemis Advisors- exclusive advisors to Helios Singapore): 16 years).
Investment Objective
Helios India Rising PMS is a Long-biased, multi-cap portfolio management scheme. It will endeavor to generate positive alpha over its benchmark (Nifty500 index) over the medium and long term.
Investment Strategy
It is a Multi-Cap long biased equity PMS, and invests in the following 3 major themes, backed by rigorous bottom-up research and long experience of the investment team in the Indian equity markets. Fund Manager believes that bottom-up research works best in sectors/themes that have strong tailwinds. Helios believes that strong and consistent portfolio returns come from both stock selection and careful portfolio construction around basic questions :-
a) What stocks to buy?
b) What time horizon to have?
c) How many stocks to own?
d) When to sell?
THEME 1: Compete With Government of India
Private companies win at the cost of government-owned companies.
THEME 2: Demographic/Lifestyle Changes
Invest in under-penetrated, even in urban India, secular theme.
THEME 3: Factor Cost Advantage
Capitalize on India’s “Global competitiveness”
THEMES TO AVOID
- Commodities
- “One Billion Consumers” Stories
- State owned companies
- Bet on India, not on Indians
Returns as of 28th Feb, 2021.
Source: https://app.pmsaifworld.com/pms-details
Philosophy (for the firm)
Company believes that strong and consistent portfolio returns come from both good stock selection and good portfolio construction. Building a robust portfolio requires answering four fundamental questions
How many stocks should they own at a time?
They are bottom-up investors who believe that stock picking works best when aided by the secular tailwind of a strong theme or positive big picture.
Being long term investors requires them to have a good understanding of the theme (potential size of opportunity, barriers to entry, competitive intensity etc.) as it allows them to hold onto a stock even if it becomes temporarily expensive due to strong returns.
Over decades of investing they have come to strongly believe that while buying robust businesses yields fair returns, adding the benefit of a strong secular tailwind leads to multiyear outperformance
Build a stock relay team (portfolio) that works across time
They believe that a good portfolio does not mean that all stocks must perform well at all times. A well-constructed portfolio is like a stock relay team where some stocks are currently performing, some stocks having done well are consolidating and some other stocks are getting ready to (hopefully) do well in the future. This philosophy allows them to nurture long term but out of favor ideas while the overall team (portfolio) is doing well.
Investment style
By looking at their portfolio construction, half of the portfolio is constructed using decent valuation, with high visibility of earnings so in this bucket value investing is followed.
For another half of the portfolio re-rating can be expected, it is discovered early so price may be little higher in the short term with an expectation of high returns in long term. For this bucket style could be mentioned as buying companies with growth at a reasonable price
Speaking about their preferred themes for investing,
Preferred investment themes are characterized by non-zero-sum competition.
Theme 1: Compete with government owned companies
- Private sector companies can win at the cost of government owned companies due to better man power, product customer experience, technology etc.
- Major sectors: Financials( banking, insurance), healthcare, education and infrastructure(very limited)
Theme 2: Demographic/lifestyle changes (primarily urban under-penetration)
- Invest in under penetrated even in urban India, secular theme.
- “Unorganized to organized” is a sub theme triggered by demonetization and introduction of GST.
- Major sectors: air conditioning, wealth management and financial products, mortgage, retail, tourism, cable/satellite TV, leisure, vocational education, gaming, liquor, branded goods.
Theme 3: Factor Cost Advantage (Information Technology/Pharmaceuticals/Speciality Chemicals etc.)
- Capitalize on “India’s global competitiveness”
- Non zero sum for in these sectors, Indian companies don’t compete with each other.
- These are export oriented companies with dollar revenue.
- Major sectors: IT, IT services, contract research, pharmaceuticals.
Note: They may own stocks that do not neatly fit their favored themes if they offer exceptional value, trigger or some other fundamental reasons for owning.
Investment Process
Easier to know what is bad than to know what is good
It is easier to reject stocks with conviction than to own stocks with conviction for it is easier to know what is bad than to know what is good. A single negative factor may be enough to know that an investment may be bad whereas even multiple positive factors may not be enough to get conviction that the investment may be good.
They believe that there is enormous value in differentiating between good and bad stocks but less so in differentiating between two good stocks (particularly if they are in different sectors and therefore are driven by different dynamics and cannot be compared directly- though they still try).
They have 2 level of rejection in stocks
Step 1: Total universe to Helios research universe
Step 2: Helios research universe to cannot be rejected on any factor
What is their time horizon?
They believe that the sweet spot for initial investing horizon is 1 to 3 years for one can more easily analyse industry trends/potential for disruption/current company and management strengths/external environment/market preferences etc.
While also having the possibility of catching stocks in phases where they significantly out-perform the market. If a company continues to do well, they can simply extend their holding period on the basis of another 1 to 3 year analysis and so on (as they have done many times in their career).
Long term does not mean “Buy & Forget”
Even though they end up being long term investors on the long side in many cases, they are not willing to simply assume that companies will continue winning at the same rate or in the same manner many years down the line. They therefore start by attempting to identify 1 to 3 year winners and then take it from there.
They also believe that the long term is a series of short terms. This means that even though they are willing to (and in practice do) hold stocks for long periods, they evaluate them continuously to confirm that their original hypothesis to buy the stock is intact.
Over their long investing history, they have seen that holding a well performing stock for a long period is not the same as holding a stock where the market really tests your conviction as the stock goes down a lot or trends sideways for several quarters/years. They have had many such experiences in their career and in most cases their conviction has paid off.
When to sell?
Continuous and close monitoring of positions
They hold most stocks for multi year periods, they continuously evaluate and monitor the companies to confirm whether their original hypothesis on the stock is intact. They are not afraid to acknowledge unfavourable developments or departures from their original thesis and may accordingly exit/ trim the position ahead of their originally intended holding horizon.
Reasons for trimming/selling stocks may be (absolute or relative) fundamental, stretched valuations or risk control
- If there is deterioration in company fundamentals or an unexpected negative development, stock will normally be sold to zero
- If stock returns significantly outperform underlying earnings growth over an extended period, stock weight may be trimmed or sold completely
- High valuations may be acceptable up to a point for high-quality companies but they don’t believe in “Buy/Hold at any valuations”
- Stock may be sold/reduced to make room in the portfolio for another stock or for risk control on both stock and sector exposure
Portfolio Construction
How many stocks should they own at a time?
A robust portfolio should have 2 kinds of stocks:
- Stocks that offer “high confidence in reasonable returns”
This group has higher quality, consistently performing companies with clear strengths, significant size of opportunity and high visibility of earnings. They do not expect these companies to get (further) re-rated but are happy with their expected growth for the next few years.
Note: They sell these stocks if valuations become too high or if there are some fundamental changes which make us reconsider their case for the company.
- Stocks that offer “reasonable confidence in high returns”
This group comprises companies where they expect higher returns from a combination of earlier discovery (or re-discovery) of stock and re-rating of company if it delivers on their expectations.
Bucket 1: 10 stocks of 5% each.
Bucket 2: 20 to 25 stocks of 2-2.5% each.
No one knows anything about anything beyond a point
They reject a concentrated portfolio strategy (owning 10-15 stocks) for a number of reasons:
Their learning (and track record) shows is that there is therefore no compromise in performance in owning a portfolio of 30-35 stocks with (initially) a 1 to 3 year view.
Knowing that many stocks do well each year (but not exactly knowing whose turn it is next), they are comfortable holding a basket of well selected stocks at any point of time. Their bet is that if they choose these stocks from attractive themes/sectors, reject what they don’t like and then do further work to arrive at buy list they have a fair shot at having many of their stocks in the large list of stocks that anyway do well each year.
7-10 stocks will be new each year and then held for 1-3 years while another 10-15 stocks will be held for very long time. The stocks that are held for long term are not identified in advance but if the company and the stock is doing well there is no reason to not hold it for a longer time.
Their portfolio is therefore always fresh and this mix has given us the consistent out performance they have had across years, cycles and phases of the market without taking too much of the idiosyncratic risk that comes with more concentrated positions. Source
Media
Samir Arora talks “How to build an equity portfolio : Learnings from 25 years of investing experience” youtube, Mar 6, 2021
In the first part of the webinar, Samir Arora breaks down different assertions which investors usually believe in, but he has a different perspective on it. He has displayed different past scenarios which are aligned with his ideology like Halo effect when looking upon management quality, effect of diversification to portfolio returns, what is long-term investing according to him. Then Dinshaw Irani (Fund manager) explained the process of rejecting the stocks, and established his confidence on their philosophy as it helped them create alpha in their past funds.
SEBI bans Samir Arora from investing in Indian stock markets, Indiatoday, 25 Aug, 2003
SEBI accused him of insider trading and banned him from investing in Indian stock markets.He has also been accused of harming the mutual fund – SEBI says the assets of the mutual fund declined by Rs 1,300 crore in three months – by publicly announcing that he would quit the mutual fund if the bidder he was siding with did not succeed in taking over Alliance Capital Mutual Fund.
SAT clears Samir Arora of insider trading charges, Newswire, 15 October, 2004
https://www.outlookindia.com/newswire/story/sat-clears-samir-arora-of-insider-trading-charges/255851
SAT cleared Samir arora from charges of insider trading, involvement in unfair and fraudulent trade practices and professional misconduct. SEBI failed to provide evidence to prove the allegations against him.
SC dismisses Sebi’s plea for insider trading charges against Samir Arora, ET, Apr 17, 2014
In 2004, Sebi moved the SC challenging the SAT decision. The final verdict is favorable to samir as he wasn’t performed any active trades between 2003 and 2005 and there was no proper evidence for insider trading, SEBI failed to prove it.
Analyst questions
- What is considered as bad news while rejecting the stocks and how do you find it?
- Diversification gives opportunity to pick more good companies, but the flip side is if few companies don’t perform well wouldn’t it be difficult to generate alpha?
- Can you describe the fundamental analysis process which you perform to find good quality companies?
Prepared by – Subramanian K
Date – 22 March, 2020
Peer Reviewed by –
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