Exploit pricing inefficiencies in stocks ranked beyond the top 100 by market cap — going long on emerging winners while shorting deteriorating names in the mid/small cap space.
This strategy hunts in less-efficient parts of the market — where analyst coverage is thin and mispricings are more common.
Large-cap stocks (Nifty 50, Next 50) are well-covered by hundreds of analysts. The real edge lies in the mid and small cap universe — stocks ranked 101st and below by market capitalisation. These stocks are often mispriced due to lower institutional coverage, creating opportunities for both long and short alpha.
The dispersion of returns within mid/small caps is much higher than in large caps. The best stock may return +80% while the worst may fall –50% in the same year. A skilled L/S manager can capture this spread by being long the former and short the latter.
Screen stocks ranked 101+ by market cap using earnings momentum, promoter quality, and cash flow filters.
Deep-dive into financial quality — related party transactions, cash conversion, auditor changes — to avoid landmines.
Build concentrated positions in companies with strong earnings trajectory, sector tailwinds, and clean governance.
Short fundamentally weak companies — declining market share, rising debt, or structural industry problems.
Position sizes are capped to ensure adequate liquidity for exit. Stop losses and drawdown limits enforced daily.
Low analyst coverage in mid/small caps means more mispricings — the raw material for generating alpha on both sides.
Governance and accounting quality checks are critical in this universe. Bad actors are shorted, clean companies are bought.
Return dispersion in mid/small caps is 2–3x that of large caps — creating more opportunities for L/S spread profits.
Get positioned in tomorrow's large caps before the crowd — when valuations are still reasonable and growth is accelerating.
Short positions in weak mid-caps or Nifty Midcap index help cushion portfolio during broader mid-cap corrections.
Operates within SEBI's SIF framework with defined concentration and exposure limits for investor protection.
This is one of the higher-risk SIF strategies. It rewards patience and tolerance for volatility.
Top 100 stocks are heavily covered by analysts and institutions, leaving little room for pricing inefficiency. By focusing on the 101st stock and beyond, the fund accesses a universe where fundamental research can generate genuine edge — both on the long and short side.
Single-stock shorting is done via F&O where available. For broader hedging, Nifty Midcap index futures are used. Position sizes are carefully calibrated to ensure the fund can exit without significant market impact.
Day-to-day volatility can be similar, but drawdowns should be shallower due to the short book hedging. Over a full cycle, the risk-adjusted returns (Sharpe ratio) should be better than a long-only small-cap fund, assuming competent management.
Given the higher risk, we typically recommend 5–15% of your total equity portfolio as a satellite allocation. The exact amount depends on your total wealth, risk capacity, and existing mid/small cap exposure. We'll size this during the suitability assessment.
SIF regulations are managed by SEBI and AMCs. If rules change, the fund will adapt its mandate accordingly. Your capital remains protected within the NAV-based structure. We'll keep you informed of any regulatory developments.
Book a free, no-obligation call with our SIF advisor. We'll assess your suitability and help you understand if this high-alpha strategy fits your portfolio.
No obligation · SEBI-regulated products only · Suitability assessed first