Professional Documents
Culture Documents
ACCOUNTABILITY
PRODUCT
“ An investment in
Knowledge pays
the best interest.
”
- Benjamin Franklin
Executive Summary
Unifi Capital is a discretionary, long-only India centric fund manager; specializing in event oriented top-down
themes and a bottom-up focus on “growth with value”.
Objective
Focus on identifying unique investment opportunities that consistently generate superior (risk adjusted) returns with due emphasis on
capital preservation.
Insider Shadow* 2010 16.65% 0.89 20.91% depth stock reviews, exposure limits and marketable liquidity
DVD* 2013 41.04% 0.74 19.05% assessment.
Holdco* 2014 48.44% 0.67 29.23%
Robust risk monitoring mechanisms comprising of daily
Spin Off 2014 27.24% 0.76 20.39%
MTM and liquidity assessment combined with real-time
APJ 20* 2015 26.35% 0.82 18.97%
tracking of corporate events and performance.
Green Fund* 2017 29.12% 0.80 15.43%
Operational Risk Control
Blended Fund 2017 27.35%# 0.93 18.75%
Best-in-class prime broker, custodian and counter parties.
* Closed for subscription
# Flat Return
About Unifi
“
• Core team of five experienced capital market
Rule #1: Never lose money
professionals who co-founded the company in
Rule #2: Never forget Rule #1
”
2001.
- Warren E. Buffett
• Unifi has a successful 16 year performance
record, evidenced by every fund having
performed better than its benchmark.
2018 17 Years
Blended Fund
The Green
2017 Timeline of Unifi History & Events
Fund
4
New office
2016 in Delhi
APJ 20 Fund
2015 India
Spin-Off Fund
Holdco
2014 Unifi Alternative
Investment fund launched
Unifi Financial
subsidiary
Fund Unifi Foundation registered as Expansion into Bangalore
Foray into Mumbai NBFC
setup Additional Office in
2013 Hyderabad
2001
Unifi is founded
Funds Management
SARATH K. REDDY
MANAGING DIRECTOR AND CHIEF INVESTMENT OFFICER
In a career spanning 25 years in the Indian financial sector, Sarath has handled a variety of functions across equities and fixed
income. Having started his career with Standard Chartered Bank, Sarath took the first opportunity that came along to turn
entrepreneur. He founded Unifi Capital in 2001 along with a highly experienced team of professionals. As Unifi’s Chief
Investment Officer, he works very closely with the analysts and fund management team.
SARAVANAN V.N.
RESEARCH & PORTFOLIO MANAGER
Saravanan is a Chartered Accountant with 12+ years of functional experience in equity research, corporate finance, auditing
and taxation. He has been with Unifi for the last 10 years and currently tracks pharmaceuticals, NBFC and domestic debt
markets. Additional responsibilities include advising on debt fund investments, hedging and arbitrage opportunities. His prior
experience includes 3 years of articleship in PwC and 2 years with ICICI Bank’s Corporate Banking division. Saravanan
manages Event arbitrage fund and the AIF High yield fund.
BAIDIK SARKAR
RESEARCH & PORTFOLIO MANAGER
Baidik is a Chartered Accountant with 10+ years of experience in consulting, corporate finance and equity research. He has
been with UNIFI for last 9 years and currently handles equity research across IT, real estate and the agricultural sector and
also assists the CIO in managing the company’s Large Cap, APJ and Spin Off fund. Prior to this, Baidik worked as a Strategy
Consultant with the Government Reforms and Institutional Development arm of Pricewaterhouse Coopers (PwC).
Key People Board of Directors
SARATH K. REDDY
MANAGING DIRECTOR
In a career spanning 25 years, Mr. Sarath Reddy has lead a variety of functions in the field of Investments. Having started his
career in Mumbai with Standard Chartered Bank, he took the first opportunity that came along to turn into an entrepreneur.
He founded Unifi Capital in 2001 with a highly experienced team of professionals. As Unifi’s Chief Investment Officer, he works
very closely with the analysts and fund management team.
NARENDRANATH K.
EXECUTIVE DIRECTOR
Narendranath is one of Unifi's co-founders. He manages day to day operations, finance and compliance. He began his financial
services career in 1980. During a 20 year stint with a leading non-bank finance company, he has had hands-on exposure at a
senior level to equipment leasing, hire purchase, and credit cards. Functionally, he has handled business development, client
relationship, capital raising, compliance and back-room operations.
G. MARAN
EXECUTIVE DIRECTOR
Maran is one of Unifi’s co-founders and currently holds position of Executive Director. Over his 16 years in the capital markets,
he has worked with some of the leading names in the financial markets. His last stint was for four years at Alpic Bank of
Bahrain & Kuwait Finance Ltd. He currently manages investments for some of Unifi’s most important relationships and has also
been instrumental in spearheading Unifi’s initiatives into niche investment strategies and new geographies.
SANDEEP REDDY
Sandeep is the co-founder of Peepul Capital. Prior to the launch of Peepul Capital in 2000, he had 10 years of experience in
Strategy Consulting with PriceWaterHouse in San Francisco and with Andersen Consulting in London. He has been one of the
early participants in the rapidly evolving Indian private equity industry having been active for over ten years. He takes overall
responsibility in defining and executing Peepul Capital's strategy. In that role he has spawned and built a number of entities as
well as driven migration through their lifecycles.
Investment Approach
H
Y
P Handoff to Research for Testing and In-depth Research Team –
O Analysis Idea Generation Process
Long Term T
Investment H
Themes
E
S
I Fund Manager –
Evaluation of Risk/Return scenarios Review & Select Investment
S Opportunities
T
E
S
Opportunistic T
I INVESTMENT COMMITTEE FUND LAUNCH
Investment
REVIEW
Themes N
G
Investment Philosophy
We believe that scale is not a driver but an outcome of excellence in our work. Our thematic investment styles are designed around niche
investment opportunities that exist in the Indian capital markets. Usually such specialties offer limited scope for scale-up in terms of the capital
we can deploy effectively. The focus is always upon discovering and taking advantage of an insight that can provide the edge, and then
adding layers of research and due diligence to construct a portfolio. The common foundation of knowledge, work culture and networks
underpin all our investment strategies, providing us the benefit of scale.
Unifi is essentially a value investor in growth businesses. We place Value first but always also demand growth potential in a business we own.
We believe that stock performance, particularly in mid and small firms, needs a catalyst; and often the best catalyst is an attractive price
combined with growth.
Unifi believes that both micro (firm level) and macro risks are critical in determining outcomes. We carefully evaluate the fundamentals of each
business that we own, and in addition ask ourselves if the prevailing and expected conditions in the economy will act for or against our
interest. At times, while making longer term investments, we consciously trade off adverse macro conditions for terrific entry valuations.
Risk is typically measured by the volatility of returns generated by an asset. While this makes great sense, we include another dimension to it,
and believe that the greatest risk emanates from the probability of an asset’s permanent diminution of value i.e. loss of invested capital. While
earning superior returns relative to benchmark is important, it is far more important to earn superior return on each unit of risk that we are
exposed.
Consistency of returns relative to our initial objective (in certain strategies we allow ourselves considerable latitude to deviate in order to
outperform eventually) as well as the benchmark is an important measure of performance. We aim to consistently generate top quartile
performance.
Our People. The bedrock of our firm’s ethos is best represented by our commitment to Accountability and Continuity, both internal and
external. We attract people who are passionate and give them time and opportunity to succeed. We maintain a tight code of conduct and have
zero tolerance for poor integrity or quality.
Adhere to the clients’ mandate. Typically, our clients are smart and successful individuals. The most important investment decision is the one
made by our client (with our RM’s careful advice) at the outset in choosing the asset class and the risk level. As his investment manager Unifi is
committed to stick diligently to the client’s mandate and deliver the best possible outcome while remaining vigilant on the underlying risks.
Investment Strategy & Funds
Investment Philosophy
Tenders Invest in sectors that Investments cherry Pick about 10 stocks Invest in sectors that
will form the basis for picked from the portfolio Three Sectors at a discount to will experience strong
Offers, IPOs Corporate Holding “greening” of the of companies that Unifi offering Visible, intrinsic value. The consolidation and value
Buybacks Demergers Companies Indian economy. The manages across each of Predictable & fund aims to migration in years to
fund aims to triple the 6 distinct funds it Sustained Growth double capital in 36 come. The fund aims to
etc months. triple capital in 5 years.
capital in 5 years. manages
Blended
Fund
Quarterly meet/call with management of all the Three independent audits – Internal,
portfolio companies to measure progress, review Accounts specific (K.S.Jagannathan &
Staggered Purchases (No Chasing) results and revalidate assumptions. Co) and Statutory (Brahmayya & Co.).
Opportunistic hedging/tactical trading to respond to The PMS auditors carry out an annual
Derivatives only to preserve gains – Zero short-term, counter-theme market moves. audit and submit an audited account to
each PMS account holder.
open positions
Market Neutral Strategies
Fund Structure
Event Arbitrage Fund
Objective
The fund seeks to generate stable absolute returns that are consistently superior to conventional fixed income instruments by identification and quick
execution of low risk – moderate gain event arbitrage opportunities arising in the equity markets from time to time. Additionally, nominal and high
yield debt would be considered to ensure optimum utilisation of funds and enhance returns with uncompromising emphasis on capital preservation.
Strategy
The core investment strategy is to exploit corporate event arbitrage opportunities in the listed capital markets that inherently have limited correlation to
economic cycles and market volatility. These opportunities are driven by corporate events like mergers, acquisitions, delisting and buyback of shares
through a “tender offer”. The risk- return pay-off in most of such deals is deal-specific and hence has limited correlation to market cycles.
Typically, the price at which the buyer makes an offer for purchase is higher than the prevailing market price so as to induce shareholders to offer their
shares. Arbitrage opportunities emerge in such cases due to the perceived discount in the pre-event market price in relation to the open offer and the
post-event price, occurring largely due to asymmetric information distribution, difference in investment objectives and expectation amongst investors.
Nominal and High Yield Debt: It is quite possible that there may not sufficient Event Arbitrage opportunities at a given point of time. Hence, we do
invest in debt / fixed income papers either short term or with high liquidity instead of parking money in low yielding liquid mutual funds. The focus is
on opportunities in the AA to Investment Grade segment to optimize after tax yields while balancing risks.
Portfolio Structure
Investments are balanced among the opportunities that are selected. Typically, exposure to any event will usually be not less than 2.5% and not more
than 25% of a portfolio. Also, exposure to an event is restricted to 10% of its potential opportunity/offer size. Investment allocation towards selected
opportunities is gradually increased over a period of time in line with our improved understanding of the event and also to mitigate the impact cost of
build-up. Sufficient liquidity in the underlying stock, credible management and the risk-reward balance are key requirements for any opportunity.
Event specific hedging are also selectively considered to lock-in gains / generate higher returns.
Fund Performance
Event Arbitrage Fund
1000 15
10
800
700
5
Value of Rs.100 Invested
600
Monthly Returns
500 0
400
-5
300
200
-10
100
0 -15
Objective
Unifi High Yield Fund (HYF) is a discretionary fund focusing on event oriented arbitrage and structured investment opportunities across multiple
asset classes with an objective to generate absolute returns of 15% p.a with a standard deviation of 12% or less. The endeavour is to consistently
generate superior compounded annual returns than conventional fixed income instruments with uncompromising emphasis on capital preservation.
Strategy
Unifi HYF’s core investment strategy is to exploit corporate event arbitrage opportunities in the listed capital markets that inherently have limited
correlation to economic cycles and market volatility. Typically, arbitrage opportunities emerge in such cases due to the perceived discount in the pre-
event market price in relation to the open offer / post-event price, occurring largely due to asymmetric information distribution, difference in
investment objectives and expectation amongst investors. In the debt segment, the focus is on high yield fixed income opportunities with accrual
mind set and tax efficiency.
Event Arbitrage opportunities emerge from corporate events like mergers, acquisition, buybacks, regulation triggered / voluntary open offers made to
the public by controlling shareholders, company delisting, declaration of special dividends etc. The risk- return pay-off in most of such deals is deal-
specific and has limited correlation to market cycles.
Nominal and High Yield Debt The focus is on opportunities in the AA to Investment Grade segment to optimize after tax yields while balancing
risks. Typically, all debt investments are made with Hold to Maturity (HTM) mind set but some of it could be traded opportunistically to maximize
capital appreciation or minimize risk.
Structure
Unifi AIF is a SEBI registered Category III Alternative Investment Fund incorporated in the form of a trust. It is a privately pooled investment vehicle
with a defined investment policy and is supervised by independent trustees. IL&FS Securities Services Limited is the independent custodian and fund
accountant. The fund is open ended with a monthly window for subscription and redemption.
Fund Performance
230 5%
210 4%
190 3%
170 2%
Value of Rs.100 Invested
150 1%
Monthly Returns
130 0%
110 -1%
Monthly Returns
UNIFI AIF
90 Birla Sh. Term Opp. Fund -2%
Fran Temp Corp. Bond
BSL Dynamic Bond Fund(G)
70 Reliance Dynamic Bond(G) -3%
50 -4%
Apr/13
Apr/14
Apr/15
Apr/16
Apr/17
Apr/18
Oct/13
Jan/14
Oct/14
Jan/15
Oct/15
Jan/16
Oct/16
Jan/17
Oct/17
Jan/18
Jul/13
Jul/14
Jul/15
Jul/16
Jul/17
Monthly Performance in (%)
Year Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Annual
FY14 0.92% 1.56% -0.70% 1.60% 1.02% 0.87% 1.18% 1.07% 2.84% 0.79% 2.20% 0.95% 14.40%
FY15 1.15% 1.43% 1.22% 1.44% 1.13% 1.20% 1.14% 1.36% 1.48% 1.28% 1.38% 1.83% 16.82%
FY16 0.92% 1.14% 0.75% 1.58% 1.26% 0.87% 1.24% 0.82% 1.31% 1.12% 0.59% 2.51% 14.67%
FY17 1.00% 1.14% 0.83% 1.24% 1.10% 1.38% 0.79% 1.28% 0.77% 0.90% 0.80% 1.97% 13.70%
FY18 1.60% 0.32% 1.00% 1.15% 1.42% 2.25% 0.90% 1.40% 0.80% 0.63% 0.81% 1.60% 14.47%
FY19 0.65% 0.65%
AIF Trust
Unifi AIF Trust
Trustees:
Mr. RAVI SANTHANAM
An engineer from IIT, Madras and a management graduate from IIM, Calcutta, he brings to the table insights and experience gained over the last
three decades including over a decade as Managing Director and CEO of large business organizations like Hindustan Motors and Mahindra group.
Mr. Santhanam has a track record of growing businesses by building organizations, brands and stakeholder relationships. He also has completed
an Advanced Management Program from Harvard Business School, Boston.
Independent
Custodian & IL&FS-Securities Services Ltd Bank HDFC Bank
Accountant
Objective
A historical analysis of market performance suggests that the broader indices at any given point in time are driven by a few sectors; each a function
of its exclusive set of headwinds and tailwinds. Thus, an investment in the right sector at the right time is a definite means of earning superior
returns over the benchmark indices. The underlying driver of this style is to align with sectors and companies that are in the favourable end of the
business cycle and underweighting sectors facing industry head winds. The portfolio will largely (>85%) consist of companies within the blue chip
universe of BSE200 while the fund management strategy is aligned with identifying and participating in growth as defined by (a) visibility of
medium to long term earnings, (b) strong balance sheet metrics, (c) competitive MOAT and, (d) how the risk/reward is positioned at existing
valuations. The fund manager at any given point in time reserves the flexibility to participate in an opportunity outside of BSE200 (not exceeding
15% of the portfolio) that is backed by in-house fundamental conviction.
Strategy
The investment strategy will be to manage differential sector exposure levels to constituents of BSE 200, relative to the Sensex. Alpha will be
generated by maintaining an overweight stance on sectors expected to lead the market and by going under weight/ avoiding sectors that are
expected to lag the market. The benchmark for performance evaluation is BSE 30 and universe for investment in BSE 200.
Portfolio Structure
60-70% of the portfolio will be invested in Top-3 sectors of BSE- 30 and the remaining will be invested in bottom up ideas from BSE 200; all sectors
participating in India’s growth are represented in BSE 200. The average market cap of companies in BSE 200 is US$4.7 bn. and the median market
cap is US$2 bn. BSE 200 companies consist of front line leaders in their respective industries and are companies that have the best operating levers,
financial metrics and governance norms to perform. Among the BSE 200, BSE 30 stocks (Sensex) will likely have a majority of the exposure.
Fund Performance
Sector Trend –Large Cap Fund
360.00 20.00
MonthlyReturns UNIFI SENSEX
330.00
15.00
300.00
Value of Rs.100 Invested
270.00 10.00
Monthly Returns
240.00
5.00
210.00
0.00
180.00
150.00 -5.00
120.00
-10.00
90.00
60.00 -15.00
Period Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year
CY11 -1.25% -1.25%
CY12 12.63% 4.89% -2.32% -0.22% -7.69% 6.67% 0.63% 0.43% 8.31% -0.15% 5.69% 0.88% 32.12%
CY13 1.81% -6.72% -0.82% 3.26% 0.87% -1.55% -3.19% -1.74% 5.52% 8.89% -1.59% 3.34% 7.35%
CY14 -4.14% 5.10% 3.25% 1.72% 8.64% 5.84% 0.76% 6.42% 0.80% 5.88% 4.93% 3.62% 51.39%
CY15 1.81% 2.88% -1.73% -3.70% 4.66% 0.25% 4.68% -3.46% 1.56% -1.96% -1.30% -0.18% 3.09%
CY16 -4.75% -9.57% 14.45% 2.41% 2.99% 3.66% 4.19% 3.51% -0.93% 2.19% -6.58% -1.33% 8.47%
CY17 8.85% 2.32% 5.66% 4.10% 1.92% 0.84% 3.73% 0.72% -1.07% 2.29% -1.85% 3.08% 34.68%
CY18 -2.15% -0.98% -1.92% 6.70% 1.40%
Objective
The Fund seeks to achieve above-average returns with below-average risk. The market’s current focus is on short-term issues, rather than on a long-
term structural shift. Today’s valuations allow for exceptional returns along with substantial downside protection. The Fund aims to double investors’
capital in 36 months or less.
Philosophy
Focus on absolute returns.
Intrinsic value is not a single, precise number; rather, it is a range.
Buy at a discount to intrinsic value, conservatively calculated.
Look for situations where the market is not only ignoring the future, but also a bit of the present.
The combination of both a bargain price at the time of purchase and the value add from retained earnings over the holding period
will contribute to investment returns.
Aim to be rational, not merely contrarian.
Cheap price in relation to value is often the single biggest catalyst.
Strategy
The fund as the name suggests concentrates on identifying Deep Value buys (within a market cap range of Rs 2000- 10000 million) that arise out of
situations such as: pockets of cyclical pessimism towards the industry or the company, valuation mismatch that arise from de-mergers of disparate
divisions into companies, compulsions of large institutional investors causing value buying opportunities. While we track the performance of our
firms actively, the fund will hold a very passive, concentrated portfolio of 8-10 stocks with virtually no trading.
Portfolio Structure
The Fund will operate on the PMS platform where the investor’s assets will remain either in cash with a bank/liquid fund (pending deployment), or
in the form of stock with CDSL. In either case, the assets will be under the investor’s name. The fund would remain open ended, but the expected
time frame to realize the full value of the investment is about 36 months. Capital would be returned to the investor either when the portfolio doubles
or at the completion of 36 months, whichever is earlier.
Fund Performance
Deep Value at Discount Fund
700.00 MonthlyReturns UNIFI MIDCAP 20.00
650.00
600.00 15.00
550.00
Value of Rs.100 Invested
500.00 10.00
Monthly Returns
450.00
5.00
400.00
350.00
0.00
300.00
250.00 -5.00
200.00
150.00 -10.00
100.00
50.00 -15.00
Period Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year
CY13 0.66% -3.56% -1.32% 2.22% 0.83% -3.32% -2.89% 1.24% 3.94% 4.88% 7.14% 9.99% 20.55%
CY14 -5.66% 8.12% 8.43% 8.58% 18.59% 11.38% 3.69% 16.17% -2.17% 1.45% 10.98% 8.99% 129.41%
CY15 6.17% -3.16% 7.32% -3.11% 4.22% -2.36% 11.85% 0.92% 0.54% -3.32% 2.66% 6.70% 30.75%
CY16 -4.66% -8.83% 10.08% 7.60% -2.43% 8.55% 5.76% 0.27% 3.24% 9.06% -4.32% -2.20% 21.83%
CY17 3.58% 2.95% 4.50% 6.37% 2.57% 2.55% 4.82% 0.27% 1.37% 6.97% 1.39% 3.94% 49.75%
Holdco Fund
Objective
The objective of the fund is to seek to unlock value by investing in listed holding companies across a wide array of industries. Holding companies in
the fund’s universe are defined as those entities which hold stakes in other listed entities, and trade at a significant discount to the NAV of the
underlying assets.
Background
The main reasons for discounts are :
• Distribution tax if assets are to be distributed.
• Lack of control discount because minority shareholders cannot exercise control over the method and timing of distribution.
• Uncertainty over future growth of the underlying assets.
• Tendency of the controlling promoter to unlock value but instead of distribution to shareholders, re-invest in empire building.
Regulatory changes, like the Companies Act 2013 have enabled certain shareholder rights and brought sweeping changes in how companies
approach “Related Party Transactions”. The renewed thrust of SEBI in ensuring higher level of corporate governance would motivate promoters to
consider delisting their holding companies.
Strategy
To invest in holding companies which are sub-scale and run as group holding companies rather than strategic investment companies.
Companies that have stakes in strong operating business but are typically run by, for and of the promoter are the most likely ones to feel the heat of
change in regulatory landscape.
Portfolio Structure
The Fund will operate on the PMS platform where the investor’s assets will remain either in cash with a bank/liquid fund (pending deployment), or if
deployed, in the form of stock with CDSL. In either case, the assets will be under the investor’s name. While the tracking and monitoring of the
investments will be active, the activity at account level will be passive, resulting in lower transaction costs and better post-tax return. The fund would
remain open ended, but the expected time frame to realize the full value of the investment is about 60 months. Capital would be returned to the
investor either when the portfolio doubles or at the completion of 60 months, whichever is earlier.
Fund Performance
Holdco Fund
600.00 MonthlyReturns UNIFI BSE 500 25.00
550.00 20.00
500.00
15.00
Value of Rs.100 Invested
450.00
10.00
Monthly Returns
400.00
350.00 5.00
300.00 0.00
250.00
-5.00
200.00
-10.00
150.00
100.00 -15.00
50.00 -20.00
Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year
CY 15 2.65% -3.99% -1.63% 4.47% 4.96% -0.23% 11.72% -8.08% -4.87% 11.72% 2.01% 2.28% 20.74%
CY 16 -11.80% -11.91% 12.79% 4.76% 0.49% 7.53% 5.36% 20.34% -1.86% 14.82% -13.61% -1.25% 20.91%
CY 17 7.74% 4.60% 17.25% 7.82% -4.02% 2.04% 1.92% 6.07% 3.67% 9.92% 2.19% 16.23% 104.15%
Spin-off Fund
Objective
The fund seeks to generate superior risk adjusted returns relative to market indices by investing in stocks of companies undergoing Spin-offs.
Typically, such an action by the company will help remove the holding company discount that the market attributes and thereby enhance the stock’s
valuation. Unifi’s proposition is to gain from the information asymmetry linked value-price mismatch, by closely tracking the entire Spin-Off process
and investing in such companies after a detailed review of their fundamentals.
Portfolio Structure
The Fund will operate on the PMS platform where the investor’s assets will remain either in cash with a bank/liquid fund (pending deployment), or if
deployed, in the form of stock with CDSL. In either case, the assets will be under the investor’s name. The fund would remain open ended, but it
would be advisable to keep an investment perspective of 36 months to provide enough time for the market to price the impact of Spin-offs. The fund
would build a portfolio of about 10 companies, where the exposure to any chosen sector will usually not exceed 30%. While the tracking and
monitoring of the investments will be active, the activity at the account level will be passive, resulting in lower transaction costs and better post-tax
return.
Fund Performance
Spin-off Fund
240.00 20.00
MonthlyReturns UNIFI MIDCAP
230.00
220.00 15.00
210.00
200.00 10.00
190.00
Value of Rs.100 Invested
180.00
Monthly Returns
5.00
170.00
160.00
0.00
150.00
140.00
130.00 -5.00
120.00
110.00 -10.00
100.00
90.00 -15.00
80.00
70.00 -20.00
Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year
CY 15 5.97% -0.16% 3.82% -3.06 % 1.83% -2.95% 8.96% -2.73% 6.92% 0.81% 14.98% 2.34% 41.44%
CY 16 -7.20% -14.81% 15.67% 5.27% 1.36% 1.56% 4.67% 0.89% -1.73% 8.65% -9.81% -3.46% -2.72%
CY 17 5.92% 2.61% 1.98% 10.02% 0.40% 2.10% 2.18% 2.53% -0.63% 8.64% 5.66% 6.27% 58.74%
APJ 20
Objective
The Fund seeks to achieve absolute returns with below-average risk over a horizon of 4-5 years. The fund would invest in sectors that will benefit
from the next stage of India’s growth on the back of improvement in India’s economic and policy climate. The Fund endeavours to grow investors’
capital by 3x in 5 years time or less.
Investment Strategy
We believe that select participants in the following industries (a) agriculture, (b) speciality chemicals, (c) mining, (d) hi tech manufacturing and (e)
infrastructure will see a new wave of growth over the next 5 years and will be a direct beneficiary of India’s macro policy initiatives as well as inherent
demographic strengths it has built over a period of time.
Over the years, each of the target sectors has built a niche set competencies that have bordered on being disruptive. This has translated to them
enjoying a quasi-oligopolistic status in their industry. However, these developments in absolute terms are at a small number. The evolution of the end
user industry is such that, this base is poised to experience high growth and operating advantage over the next few years. In other words, each of
these firms, have a high inbuilt option to participate in a disproportionate pay off. Our endeavour is to participate with concentrated positions across
sectors that will be a direct or proxy beneficiary of the growth in the specified industries. While our study of the opportunities reveals the underlying
and obvious risks that could play out in future, we believe the risk reward equation is favourable to an equity investor at current valuations
considering the next 5 years’ potential growth.
Universe
The Fund’s investment universe is the set of all listed companies whose market capitalization ranges from Rs. 200 cr. and above. The Fund’s primary
source of investment ideas will come from firms within industries that are a proxy to the following industries: (a) agriculture, (b) speciality chemicals,
(c) mining, (d) hi tech manufacturing and (e) infrastructure. The investee companies would necessarily be one that has built a niche for itself over the
years and is set to leverage on the same to deliver a pace of return that is disproportionate on the upside, in the coming years.
Portfolio Structure
The Fund will operate on the PMS platform where the investor’s assets will remain either in cash with HDFC Bank/liquid fund (pending
deployment), or in the form of stock with CDSL. In either case, the assets will be under the investor’s name. The Fund will hold a concentrated
portfolio of about 12-20 stocks, across various sectors. There is likely to be low turnover in the Fund. While the Fund will be open-ended, the expected
time horizon for an investment in the Fund is 60 months. There will be no benchmarking over the life of the Fund.
Fund Performance
APJ 20
220.00 MonthlyReturns UNIFI MIDCAP 20.00
210.00
200.00
190.00 15.00
180.00
170.00
160.00 10.00
Value of Rs.100 Invested
150.00
Monthly Returns
140.00
130.00 5.00
120.00
110.00
100.00
90.00 0.00
80.00
70.00
60.00 -5.00
50.00
40.00
30.00 -10.00
20.00
10.00
0.00 -15.00
Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year
CY 16 -5.88% -11.24% 16.32% 3.48% 6.02% 4.07% 2.34% 5.54% -3.48% 3.85% -1.37% -1.24% 17.00%
CY 17 8.75% -0.06% 10.54% 3.82% -1.31% 0.59% 4.28% -1.90% 4.05% 10.74% -1.07% 6.50% 53.78%
Green investments refer broadly to companies that operate primarily in the renewable energy, clean technology and environmental technology
space. These would include companies that provide products and services offering solutions to environmental problems or that improve the
efficiency of natural resource use.
Investment Strategy
The Fund will focus on investing in companies which would provide the support infrastructure for a “Green Economy” This would include
manufacturers/producers of renewable energy systems , organic chemicals, emission control products, energy efficiency products, water & waste
management solutions. As this is an evolving theme newer business models are expected to develop during the course of time. Unifi’s key strength
has been its ability to identify the next generation of winners from the small and midcap space. In continuation of this strategy Unifi would primarily
focus in the small and midcap space to identify companies which fit into the Green theme..
Universe
The Universe of Companies would be broadly selected from the following sectors:
These sectors are only indicative of our current thinking and it is entirely possible that as our research progresses we might look at companies beyond
these sectors. But in all cases the Green theme would be the underlying basis for selection.
Portfolio Structure
The portfolio is likely to have around 15 stocks in the PMS platform. The investor's assets will always remain in the investor's name with ILFS as
custodian. While the tracking and monitoring of the investments will be active, the activity level of trades will be passive.
Fund Performance
The Green Fund
150.00 15.00
MonthlyReturns UNIFI MIDCAP
140.00
10.00
Value of Rs.100 Invested
130.00
Monthly Returns
5.00
120.00
0.00
110.00
-5.00
100.00
90.00 -10.00
Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year
CY 17 -0.21% 4.51% 3.03% 6.45% 3.80% 1.64% 2.66% 0.10% 0.92% 6.99% 4.02% 0.96% 40.61%
Blended Fund
Objective
Unifi Capital actively manages six bottom up equity strategies that sift through opportunities across the breadth of the markets. Across the funds, the
mandate is to participate in opportunities that arise from a mix of emergent themes, corporate actions and of course attractiveness of core
fundamentals. The objective of all the respective funds under management is to deliver superior risk adjusted returns from an absolute perspective.
The Blended Portfolio Strategy is targeted at individuals who have a relatively longer term horizon and seek a passive style of investing which relies
on the fund manager’s discretion of choosing the best opportunities from UNIFI’s thematic fund universe in a dynamically changing investment
universe.
Investment Strategy
Investments under this fund will be cherry picked from across the portfolio of companies that Unifi manages across each of the 6 distinct funds it
manages. In effect, the endeavor is to be able to identify the “the best of the best”. This fund aims in cutting down the investors switching cost and
effort in migrating between best opportunities at any diverse point of time.
Value creation requires a mental model which goes beyond the obvious. It requires a meticulous mindset which is able to sift through reams of
information and assimilate only that which is relevant in identifying value accretive opportunities. Metaphorically this could be compared to
searching the proverbial needle in a haystack. This fund investment strategy will be to pick the best opportunities from the following themes.
Spin Off:
In a single corporate structure with multiple businesses, the sum of the value of the separate parts is often less than that of the whole. A de-merger of
disparate businesses, unlocks the financial and management bandwidth required for the respective businesses to grow. Spin off fund invests in
situations that offer great scope for the businesses to realize their full growth potential and attract commensurate market valuation.
DVD:
Few segments of the market tend to be mispriced in spite of visible growth prospects, resulting in such stocks trading at a deep discount to their
intrinsic value. Reasons could vary from inadequate understanding of a business by most analysts, low relative market cap and liquidity or the lack of
correlation to benchmark indices. DVD invests in such businesses and exploits market inefficiencies.
HoldCo:
Many holding companies are run as group holding companies rather than strategic investment companies. This results in a perennial discount in
their valuations but such discounts are not a constant. The Holdco fund identifies strong underlying businesses and looks for massive valuation
discounts that are likely to recover as promoters feel the heat of change in the regulatory landscape; meantime benefiting from value convergence in a
rising market.
Fund Structure
APJ 20:
As always, markets fancy few sectors that have done well in the past ignoring the rest. Of the sectors which are less understood, few like specialist
chemicals, agri, precision manufacturing have become globally competitive and are privy to an expanding market opportunity. APJ20 invests in firms
that have evolved and are in a ripe position to benefit from such growth prospects.
Green Fund:
The investment focus of the green fund is on companies which provide products and services that help in reducing the carbon footprint in the
environment and/or result in more efficient use of natural resources. Within the context of this strategy, the sectors that have been identified for
creating the portfolio are - emission control, energy efficiency, water management and waste management.
Universe
The fund’s investment universe would include the diverse investment opportunities within the following mentioned funds at any specific point of
time: SPIN OFF, DVD, HOLDCO, APJ20, Green fund and the Insider Shadow Fund.
The fund’s investments will be majorly concentrated in small and midcap space wherein it is difficult for “institutional” type of capital to invest and
where Unifi’s relatively smaller size helps us to focus in niche areas of the market.
Portfolio Structure
The portfolio is likely to have around 15 stocks in the PMS platform. The investor's assets will always remain in the investor's name with ILFS as
custodian. While the tracking and monitoring of the investments will be active, the activity level of trades will be passive.
Fund Performance
Blended Fund
140.00 MonthlyReturns UNIFI MIDCAP 14.00
12.00
130.00 10.00
8.00
Value of Rs.100 Invested
120.00
6.00
Monthly Returns
4.00
110.00
2.00
0.00
100.00
-2.00
90.00 -4.00
-6.00
80.00 -8.00
Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year
Objective
Generate superior risk adjusted returns, in relation to the broad market, by investing in fundamentally sound companies where the promoters’ have
acquired additional shares at market prices or companies that have repurchased their own shares. Typically, such an action by a company or a
controlling shareholder demonstrates their conviction that the company’s growth prospects or inherent value has not been captured in its stock price
at that point.
Strategy
The strategy is to create and update (on a daily basis), a universe of companies where the promoter is increasing his stake at market prices either
through creeping acquisitions or buyback route, where complete disclosures of stock purchases have been made to the exchanges, and that seem to be
motivated either by an undervalued stock price or an impending improvement in business prospects that are still to be reflected in the market price.
From this universe the fund cherry picks for investment, firms using a bottom-up fundamental evaluation validated by the fund manager having a
positive view of the sector in which the firm operates. An emphasis is placed on companies whose promoters have increased their stake in the recent
past & where the current market price is trading at a discount or at an acceptable premium to the price at which the promoter increased his stake. The
extent of financial outlay by the promoter or company has to be meaningful in relation to the size of the firm.
Portfolio Structure
The fund intends to keep investments balanced among companies, but may significantly vary exposure to companies as situations evolve. Typically,
the fund will hold about 20 positions ranging from 2.5% to 10% of the portfolio, with a median of 5%.
Fund Performance
Insider Shadow Fund
500.00 20.00
MonthlyReturns UNIFI SMALLCAP
450.00
15.00
400.00
Value of Rs.100 Invested
10.00
350.00
Monthly Returns
300.00 5.00
250.00 0.00
200.00
-5.00
150.00
-10.00
100.00
50.00 -15.00
Period Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year
CY10 4.96% 3.73% 2.55% 4.22% 3.02% -6.21% 1.47% 14.08%
CY11 -9.78% -5.92% 4.22% 5.04% -4.58% -0.28% 0.49% -11.02% -1.67% -2.03% -10.30% -8.49% -37.48%
CY12 15.65% 4.96% -2.23% 0.39% -7.13% 3.78% -2.00% -2.50% 10.55% 2.99% 0.63% 1.27% 27.31%
CY13 -4.04% -9.83% -2.37% 3.26% -0.06% -2.80% -4.19% -5.12% 4.83% 6.85% 0.64% 6.01% -7.94%
CY14 -6.33% 2.61% 8.87% 2.76% 11.84% 13.59% 0.44% 10.95% 5.17% 2.03% 2.24% 0.25% 67.42%
CY15 6.18% 2.62% 5.16% -4.68% 1.22% 2.22% 11.67% -7.95% 6.97% -0.60% 1.35% 1.32% 26.84%
CY16 -7.52% -8.25% 14.73% 4.69% -0.47% 4.41% 5.43% 1.79% -1.28% 7.73% -7.15% -3.57% 8.23%
CY17 9.52% 9.75% 4.97% 7.69% -2.46% 1.74% 0.88% 0.55% -1.44% 9.47% 0.54% 16.68% 73.11%
CY18 -0.02% 1.22% -6.42% 7.55% 1.85%
Delisting Fund*
Objective
Several multinational companies which listed their Indian subsidiaries during the 1970s to comply with the then GOI rules have been seeking to delist.
The SEBI (Delisting of Equity Shares Regulation of 2009) brought in much greater clarity in the delisting process and effectively shifted the balance of
power in favour of minority shareholders.
The Delisting Fund sought to achieve attractive absolute rate of return by investing in companies that have a high likelihood of delisting. The
amendments made by SEBI to SCCR, 1957, Securities Contracts (Regulation) (Amendment) Rules, 2010, effective from 04.06.2010 and Securities
Contracts (Regulation) (Second Amendment) Rules, 2010, effective from 09.08.2010, with respect to increasing the level of public shareholding in Listed
Companies to at least twenty five percent and any listed company which has public shareholding below twenty five percent, shall increase it to at
least twenty five percent within a period of three years catalysed this opportunity. The price discovered in the delisting process invariably offered a
substantial premium over the then prevailing market price.
Strategy
The fund built a portfolio of 10-12 companies from an universe of about 40, that have a high probability of delisting, without compromising on the
fundamentals and valuations. We ran several filters that examined their technology/product and market position versus the sector, financial strength,
return ratios, management’s track record and valuations.
Portfolio Structure
The fund invested into a diversified portfolio of 5-10 companies. Not more than 40% was invested in one sector and single stock investment was
capped at 20% of the portfolio. Market capitalization of 100Cr was considered as a minimum threshold limit for stock selection. Most, if not all of the
exits, were through the market to derive maximum tax advantage. Use of derivatives was provisioned to hedge the portfolio without exposing the
fund to any leverage.
* The fund was conceptualized and launched in 2009 as a 18-24 month closed ended structure. Partial redemption was made at the end of 12 months and 100% proceeds were returned to investors in March 2011.
Fund Performance
Delisting Fund*
180 12% RETURNS
Monthly Returns Unifi BSE 500 Unifi BSE 500
170 10%
Average Monthly Return 2.97% 1.08%
Value of Rs.100 Invested
Monthly Returns
6% Largest Monthly Gain 11.01% 9.53%
150
Largest Monthly Loss -5.46% -10.46%
4%
140 % of positive months 68.42% 68.42%
2% RISK
130
0% Standard Deviation
120 (Annualized) 14.54% 18.78%
-2%
Sharpe Ratio 2.25 0.21
110 -4% COMPARISON TO BENCHMARKS
100 -6% Alpha 30.96%
Beta 0.45
90 -8%
Correlation 0.62
Jun/10
Jul/10
Aug/10
Feb/10
Oct/10
Dec/10
Sep/10
Jan/11
Jan/10
Feb/11
Aug/09
Aug/09
Mar/10
Apr/10
May/10
Oct/09
Dec/09
Sep/09
Nov/10
Nov/09
R-Squared 0.38
Year Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Returns
FY09 - - - - 3.36% 7.23% 5.01% 6.18% 3.77% -1.17% 5.51% 6.43% 42%
FY10 8.85% -5.46% 11.01% -0.16% -0.44% 4.52% 3.45% -1.43% 1.58% -2.05% 0.28% - 21%
* The fund was conceptualized and launched in 2009 as a 18-24 month closed ended structure. Partial redemption was made at the end of 12 months and 100% proceeds were returned to investors in March 2011.