The word ‘Akshayam’ means ‘long life’ in Sanskrit. To have a long life as a hedge fund nowadays, you must not only post consistently good performance, but also have an original investment edge that doesn’t simply emulate someone else’s alternative thesis.
The Akshayam Asia Fund was launched in June 2009 by Kedar Wagle and Ajay Sharma and recently started external marketing. The duo met when they were members of theLegg Mason/Citi asset management team, which managed $6 billion. The fund, which is up 17.47% net of fees since inception, was originally seeded by KE Capital, which is still its anchor investor.
Akshayam’s portfolio typically comprises about 50–60 stock positions, each with its own investment thesis, which is expected to play out in the next one to two quarters. Wagle outlined three main differences that Akshayam’s strategy builds into its portfolio construction.
First, there is no top-down macroeconomic component to their strategy. All their positions are determined from a bottom-up analysis based on an intensive proprietary research process.
Second, thanks to their backgrounds as hands-on stock-pickers, all positions are conceptualised by home-grown ideas emanating from Wagle and Sharma. They don’t look to ideas generated by sell-side analysts, which have already been picked over numerous times.
Third, they run the fund like a true long/short strategy, by trying to generate returns on both the long and short sides of the portfolio. There are no short positions derived from futures or indices positions – all are single-stock shorts.
The $30 million fund has run a low average net exposure of just 16.8% since inception. For example, Akshayam was short Indian financial stocks when net interest margins were peaking about three months ago and they were faced with payables to their pension funds.
“We assessed at the time that Indian financial stocks were trading at one to two standard deviations above fair valuation,” says Wagle.
The fund covers Asia ex-Japan and ex-Australia. The two men have split coverage responsibility by sector, with each specialising in the sectors they have covered in the past. Sharma covers technology, consumer, industrials, healthcare and materials, and Wagle looks after telecoms, utilities, finance, property and energy.
UBS and Morgan Stanley are the fund’s prime brokers, Citi is the administrator and QRMO handles the middle- and back-office tasks, as well generating daily risk reports.