HI European Market Neutral Fund

The HI European Market Neutral strategy is run by Fred Batoua (ex Chilton) and Paul Marriage of Tellworth Investments who took the lead of the strategy at the end of 2019 (previously the HI Principia Fund). The portfolio is a market neutral equity strategy focussed on Pan European companies, predominately large caps. The stock selection process is purely bottom-up with the team leveraging proprietary models and data screens to filter the opportunity set. By scoring stocks mainly on fundamental inputs (some of those are more static in nature e.g. FCF, ROE, earnings stability, etc., while other are more dynamic e.g. acceleration of sales, earnings and margins, etc.) the team is able to reduce the investable universe (c. 800 companies) to a smaller subset of quality stocks (50-100 names). In the first stage of the filtering process, sectors are ranked by relative strength which help understanding the sectors that are leading the market and the ones that are losing momentum. Then within the leading sectors the system screens for the best single stock opportunities that can express such leadership (and vice versa for short ideas). The final step of the investment process is the deeper fundamental analysis from the analyst team, which is complemented at the portfolio level by the use of technical patterns to optimise entries/exits and position sizing. The final portfolio is diversified, with roughly 40 longs and 30 shorts. Net exposure is kept within a tight range (-/+10%) vs. a gross exposure of 100-200%.