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DHANDHO INVESTING  Re-Imagine Active-Value-Investing to buy ‘Growth at Reasonable Price’ ( G.A.R.P ) Varun Goenka JM Financial Group. [email_address] +9004670600
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],“  In Search of Morpheus , to dive the rabbit-hole “
Pursuit “ Predicting rain doesn't count , building ARKS does “ ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],“  In physics it takes 3 laws to explain 99% of data , in finance it takes 99 laws to explain 3% of the data “ ~ we’ll address the 97% “
DHANDHO Global Equity Investment Strategy
Is it a ZERO SUM Game : Can “ Real World Complexities “be measured / quantified….. Approximately Right VS Accurately Wrong  Under-estimating Exogenous Forces VS Humble judgment of a reasonable value deal. [ 500+ Stocks ] * MOVING VARIABLES   [ Global  ( Currencies / Interest Rates / Liquidity / Inflation )  + Macro.  ( Commodities , Credit-flow , Demand-Supply , Consumption , External Trade )  + Regulatory  ( Taxation , M&A , Primary & Secondary Markets , Transaction Costs , Company's Act )  + Industry  ( Regulation , Global Linkage , Competitive Landscape / Earnings vs Consumer Power , Economies of Scale vs Capital Structure )  + Company Specific  ( Management , Leverage , Cost Economics , Contracts ) ...etc  ]  + Diverse Expectation & Sentiment of Investors / Analysts towards above =  Price vs Value
DHANDHO Global Equity Investment Strategy
 
 
“  The ZEN of Portfolio Strategy “ ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Education required:  Grad. School Finance + Well Read + Common Sense + Exceptional EQ + Avg. IQ  VS Other Assets :  The only Asset class to be relatively recession proof , deliver operating performance in line with AAA Bonds even during  the worst  periods.
A Simple , Stupid , Suave  (‘ 1-2-3 ‘ & ‘a-b-c ‘)  answer –to- a riddle  Complex , Crazy, Cryptic (‘ xyz ‘ & ‘  αβγ  ‘  ) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
( Simulation * Munger’ism ) * 2 ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Value –for- Every penny !!
Starting Gate - As on Nov. 30 , 2009 – An Ariel Map of Markets Performance Nov. '09 - Jan. '10 ( Nifty -3% ) BSE Small-Cap 9.4% CNX Midcap 0.7% BSE 200 -1.9% BSE Oil ( ONGC ! ) -3.3% BSE Mid-Cap 1.5% CNX 100 -2.4%
DHANDHO Global Equity Investment Strategy
DHANDHO Global Equity Investment Strategy
DHANDHO Global Equity Investment Strategy
DHANDHO Global Equity Investment Strategy
Value for Money ~ Max. ( Sales / O.Income / Profit / Networth / Assets ) per Enterprise Value
DHANDHO Global Equity Investment Strategy
Are we colored by Suits & PPts : Are the right Questions being asked !! ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
“  DJIA grew from 65 –to- 11500 in the 20 th  century ~ i.e 5.3% CAGR. At the same CAGR , Dow becomes 20,00,000 “ EFFECT OF INDEX PICKING Which Index gives u a better VALUE / MCAP. INDEX (180D) (365D) (2Y) (3Y) (5Y)             Nifty (S&P CNX) 6.8 67.4 -7.0 12.7 131.6 BSE Sensex 6.1 71.3 -8.8 8.8 143.5             CNX 100 9.0 76.7 -5.5 15.6   BSE 100 8.4 80.3 -8.5 14.8 140.6             CNX 500 11.7 86.5 -5.7 16.5 127.4 BSE 500 11.6 88.9 -9.4 14.1 130.5             BSE 200 10.0 85.3 -7.9 15.3 130.0 BSE Mid-Cap 18.8 123.1 -15.8 4.2   BSE Small-Cap 33.5 149.8 -17.4 7.1   PORTFOLIOs ~ Emailed Date Type   Benchmark ~ Relevant periods     Portfolio Return BSE100 BSE200 Bse MidCap BSE SmallCap 15th May  46 MidCaps. (  300-2000cr Mcap. ) 133% 36.70% 40.50% 69.10% 91.60% 22nd Dec. '09 9 Quasi Large Caps 0% -4% -4% -1% 3% 8th Dec. '09 10 MidCap. & Quasi MidCap. 8.90% -7% -6% -3% 3% 17th Sep. '09 32 MidCap. & Quasi MidCap. 11% -2.40% -1.20% 4.70% 11.90% 18th Jan. '09 Large & Quasi Large Cap. 8% -9.7% -9.7% -9.2% -9.2% 12th Jan. '09  37 stocks of Bottom 300 of BSE500 0% -8.5% -8.3% -7.10% -6.30% 12th Jan. '09  42 stocks of Top200 -6%
Client & Product Scalability  ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
The End of Beginning :  Possible Starting point! ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
A string of impressive no.s * ‘ ZERO ‘ = 0
S&P 500 ( Evidence from ~ The People , Experience value-Investing )   The S&P 500® has been widely regarded as the best single gauge of the large cap U.S. equities market since the index was first published in 1957. The index has over US$ 3.5 trillion benchmarked, with index assets comprising approximately US$ 915 billion of this total. The index includes 500 leading companies in leading industries of the U.S. economy, capturing 75% coverage of U.S. equities.
THE VALUE People… Certainly not perfectly LINEAR…in the game of Yearly Index-Out Perf. ; but way ahead in their own frame of time…
A Value   SCREEN   Benjamin Graham ~ First lady…
Value vs Growth ::  David vs Goliath
 
 
 
 
 
Market Timing is expensive….
Simplicity & Significance of ‘ PE ‘
 
 
Effect : PE  ( expansion / contraction )  + Earnings  ( +ive / -ive )
Low P / E ~ Perspective
 
High P / E ~ Perspective
 
 
Evidence from simple ‘ Financial Metrics ‘    ~ 1987-2006 ( 20yrs )
CRITICAL TO VALUE-CREATION….
RETURN RATIOS….
RETURN RATIOS….
RETURN RATIOS….
FREE CASH-FLOW..….
On INVESTED CAPITAL..….
What really drives Long-term Equity Returns !!
 
Is there just one solution / perspective !! “  The problem is never to get new , innovative thoughts into our minds – but how to get the old ones out. “
Varun Goenka JM Financial Group.  +9004670600 [email_address] Disclaimer: This email is solely for the addressee(s) and may contain confidential information. If you have received this email in error, please destroy and notify sender immediately. Sender does not intend to waive confidentiality  or  privilege.  If  you  have received  this  email  in error and  /  or  are  not the intended recipient, you are notified that reading, using, copying, printing, forwarding or distributing  of this email is strictly prohibited.  You are therefore advised to immediately  delete  this email communication  including any attachments permanently from all your  systems  wherein this email may be received or stored intentionally and/or inadvertently.

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DHANDHO Global Equity Investment Strategy

  • 1. DHANDHO INVESTING Re-Imagine Active-Value-Investing to buy ‘Growth at Reasonable Price’ ( G.A.R.P ) Varun Goenka JM Financial Group. [email_address] +9004670600
  • 2.
  • 3.
  • 5. Is it a ZERO SUM Game : Can “ Real World Complexities “be measured / quantified….. Approximately Right VS Accurately Wrong Under-estimating Exogenous Forces VS Humble judgment of a reasonable value deal. [ 500+ Stocks ] * MOVING VARIABLES [ Global ( Currencies / Interest Rates / Liquidity / Inflation ) + Macro. ( Commodities , Credit-flow , Demand-Supply , Consumption , External Trade ) + Regulatory ( Taxation , M&A , Primary & Secondary Markets , Transaction Costs , Company's Act ) + Industry ( Regulation , Global Linkage , Competitive Landscape / Earnings vs Consumer Power , Economies of Scale vs Capital Structure ) + Company Specific ( Management , Leverage , Cost Economics , Contracts ) ...etc ] + Diverse Expectation & Sentiment of Investors / Analysts towards above = Price vs Value
  • 7.  
  • 8.  
  • 9.
  • 10.
  • 11.
  • 13. Starting Gate - As on Nov. 30 , 2009 – An Ariel Map of Markets Performance Nov. '09 - Jan. '10 ( Nifty -3% ) BSE Small-Cap 9.4% CNX Midcap 0.7% BSE 200 -1.9% BSE Oil ( ONGC ! ) -3.3% BSE Mid-Cap 1.5% CNX 100 -2.4%
  • 18. Value for Money ~ Max. ( Sales / O.Income / Profit / Networth / Assets ) per Enterprise Value
  • 20.
  • 21. “ DJIA grew from 65 –to- 11500 in the 20 th century ~ i.e 5.3% CAGR. At the same CAGR , Dow becomes 20,00,000 “ EFFECT OF INDEX PICKING Which Index gives u a better VALUE / MCAP. INDEX (180D) (365D) (2Y) (3Y) (5Y)             Nifty (S&P CNX) 6.8 67.4 -7.0 12.7 131.6 BSE Sensex 6.1 71.3 -8.8 8.8 143.5             CNX 100 9.0 76.7 -5.5 15.6   BSE 100 8.4 80.3 -8.5 14.8 140.6             CNX 500 11.7 86.5 -5.7 16.5 127.4 BSE 500 11.6 88.9 -9.4 14.1 130.5             BSE 200 10.0 85.3 -7.9 15.3 130.0 BSE Mid-Cap 18.8 123.1 -15.8 4.2   BSE Small-Cap 33.5 149.8 -17.4 7.1   PORTFOLIOs ~ Emailed Date Type   Benchmark ~ Relevant periods     Portfolio Return BSE100 BSE200 Bse MidCap BSE SmallCap 15th May 46 MidCaps. ( 300-2000cr Mcap. ) 133% 36.70% 40.50% 69.10% 91.60% 22nd Dec. '09 9 Quasi Large Caps 0% -4% -4% -1% 3% 8th Dec. '09 10 MidCap. & Quasi MidCap. 8.90% -7% -6% -3% 3% 17th Sep. '09 32 MidCap. & Quasi MidCap. 11% -2.40% -1.20% 4.70% 11.90% 18th Jan. '09 Large & Quasi Large Cap. 8% -9.7% -9.7% -9.2% -9.2% 12th Jan. '09 37 stocks of Bottom 300 of BSE500 0% -8.5% -8.3% -7.10% -6.30% 12th Jan. '09 42 stocks of Top200 -6%
  • 22.
  • 23.
  • 24. A string of impressive no.s * ‘ ZERO ‘ = 0
  • 25. S&P 500 ( Evidence from ~ The People , Experience value-Investing ) The S&P 500® has been widely regarded as the best single gauge of the large cap U.S. equities market since the index was first published in 1957. The index has over US$ 3.5 trillion benchmarked, with index assets comprising approximately US$ 915 billion of this total. The index includes 500 leading companies in leading industries of the U.S. economy, capturing 75% coverage of U.S. equities.
  • 26. THE VALUE People… Certainly not perfectly LINEAR…in the game of Yearly Index-Out Perf. ; but way ahead in their own frame of time…
  • 27. A Value SCREEN Benjamin Graham ~ First lady…
  • 28. Value vs Growth :: David vs Goliath
  • 29.  
  • 30.  
  • 31.  
  • 32.  
  • 33.  
  • 34. Market Timing is expensive….
  • 35. Simplicity & Significance of ‘ PE ‘
  • 36.  
  • 37.  
  • 38. Effect : PE ( expansion / contraction ) + Earnings ( +ive / -ive )
  • 39. Low P / E ~ Perspective
  • 40.  
  • 41. High P / E ~ Perspective
  • 42.  
  • 43.  
  • 44. Evidence from simple ‘ Financial Metrics ‘ ~ 1987-2006 ( 20yrs )
  • 51. What really drives Long-term Equity Returns !!
  • 52.  
  • 53. Is there just one solution / perspective !! “ The problem is never to get new , innovative thoughts into our minds – but how to get the old ones out. “
  • 54. Varun Goenka JM Financial Group. +9004670600 [email_address] Disclaimer: This email is solely for the addressee(s) and may contain confidential information. If you have received this email in error, please destroy and notify sender immediately. Sender does not intend to waive confidentiality or privilege. If you have received this email in error and / or are not the intended recipient, you are notified that reading, using, copying, printing, forwarding or distributing of this email is strictly prohibited. You are therefore advised to immediately delete this email communication including any attachments permanently from all your systems wherein this email may be received or stored intentionally and/or inadvertently.