Investment Analysis & Portfolio Management

Assignment 3 Portfolio Analysis

WEEK 3 (January 22nd to January 29th, 2014)

Submitted To: Dr. SohailZafar

Submitted By: AnamJalil

M. Hamza Nawaz

Rana Ali Asad

KiranIdrees

Ayesha Iqbal

Dated: 30th January, 2014

Lahore School of Economics

 Portfolio Management Weekly Report

Week 3

Passive Portfolio

Number of
Serial No Company Po (Rs.) Wo (Rs.) P1 (Rs.) W1 (Rs)
Shares

1 OGDCL 75,500 279.91 21,133,205 271.27 20,480,885

2 Attock Refinery 74,475 221.52 16,497,702 213.92 15,931,692
3 Engro Corp 85,500 186.2 15,920,100 175.3 14,988,150
4 Fauji Fertilizer 89,500 117.72 10,535,940 114.63 10,259,385
5 Engro Foods 92,500 104.14 9,632,950 104.93 9,706,025
6 Nishat Mills 96,500 138.78 13,392,270 135.11 13,038,115
7 NishatChunnian 91,500 65.66 6,007,890 63.09 5,772,735
8 Fauji Cement 82,125 16.17 1,327,961 16.07 1,319,748
Netsol
9 115,000 48.26 5,549,900
Technologies 46.4 5,336,000
10 Faysal Bank 110,000 13.4 1,474,000 13.41 1,475,100

Total 101,471,918 98,307,836

Where

P0 = Price of 22ndJanuary 2014

P1 = Prices of 29thJanuary 2014

W0 = Initial wealth which is Rs. 101,471,918

W1 = Wealth calculated by number of shares multiplied by closed prices of 29th January 2014
= 98,307,836

Return

Rate of Return = (W1-W0)/W0

ROR = (98,307,836 - 101,471,918) / 101,471,918

Periodic Rate of Return = -3.12%

Annual Rate of Return = (1 + Periodic Rate of Return/No of Weeks for trading)^52 - 1

= -0.81%
 MARKET PORTFOLIO
22nd January, 2014
No of Artificial shares Purchased = 100,000,000/27,015.10

= 3,702

Amount Invested (Wo) = 3,702 * 27,015.10

= Rs. 100,000,000

Amount Remaining in Cash = 100,000,000-100,000,000

= Rs. 0
29thJanuary, 2014
KSE-100 Index = 26,595.63
Value of Investment at the end of week 1 (W1) = 26,595.63* 3,702
= Rs 98,447,276

Rpweek3 = (W1 Wo)/Wo

= (98,447,276 -100,000,000) / 100,000,000

Rpweek3 = Rate of Return = -1.55%

 Levered Portfolio

Number
Serial of Po P1
No Company Shares (Rs.) Wo (Rs.) (Rs.) W1 (Rs)

1 OGDCL 84,500 279.91 23,652,395 271.27 22,922,315

Netsol
2 Tchnologies 529,000 48.26 25,529,540 46.4 24,545,600
3 Nishat Mills 167,000 138.78 23,176,260 135.11 22,563,370
4 Nishat Chunnian 190,000 65.66 12,475,400 63.09 11,987,100
5 Attock Refinery 107,500 221.52 23,813,400 213.92 22,996,400
6 Fatima Fertilizer 420,700 28.62 12,040,434 28.64 12,048,848
7 Engro Corp 73,500 186.2 13,685,700 175.3 12,884,550
8 PSO 57,500 344.84 19,828,300 330.65 19,012,375

Total 154,201,429 148,960,558

Weekly Interest to be Paid = (16%/52) * 50,000,000

= Rs. 153,846

Ending Owners Equity (Week 3) = Market Value of Shares Loan Interest Paid

= 148,960,558 50,000,000 153,846

= Rs. 98,806,712

Periodic Rate of Return

Rpweek3 = (End OE Beg OE)/Beg OE

= (98,806,712 104,047,583)/104,047,583

Periodic Rate of Loss = -5.03%

Annualized Rate of Loss = (1-0.0503) ^ 52 - 1

= -93.1%
 Active Portfolio

Number of Po P1
Shares (Rs.) Wo (Rs.) (Rs.) W1 (Rs.)
1 OGDCL 186,500 279.91 52,203,215 271.27 50,591,855
2 Fauji Cement 282800 16.17 4,572,876 16.07 4,544,596
3 Maple Leaf 279,000 29.32 8,180,280 28.41 7,926,390
4 PSO 57,500 344.84 19,828,300 330.65 19,012,375

Netsol
5 Technologies 529,000 48.26 25,529,540 46.4 24,545,600

6 Attock Refinery 107,500 221.52 23,813,400 213.92 22,996,400

Total 134,127,611 129,617,216

Return on Portfolio (Week 3) = (W1 W0)/W0

= (129,617,216 134,127,611)/ 134,127,611

Periodic Loss on Portfolio (Week 3) = -3.3%

Stocks Traded

Stocks Sold: A large portion of our investment is made in OGDCL, which was purchased at a
price above its average of the previous 52 weeks. Now, we believe that its prices will continue to
fall as they have witnessed the maximum in the past weeks, so to avoid further loss we are
selling its shares and are diversifying with investments in other stocks.

Stocks Purchased: Overall, as of 29th January, 2014 the Market Index has fall and the prices
of stocks have fallen. We believe that these prices and the overall index can increase in near
future and thus we are diversifying our investment in 4 stocks. The amount received from the
sale of OGDCL stock is invested in purchasing the stocks of Engro Foods, Engro Corp, Fauji
Fertilizer and Attock Petroleum. We are buying these stocks because we believe that at current
prices they are undervalued and will rise in near future.
Table after Trading:

Number
of
Company Name Shares Po (Rs.) Wo (Rs.)
1 Fauji Cement 282,800 16.07 4,544,596
2 Maple Leaf 279,000 28.41 7,926,390
3 PSO 57,500 330.65 19,012,375
Netsol
4 Technologies 529,000 46.4 24,545,600
5 Attock Refinery 107,500 213.92 22,996,400
6 Engro Foods 120,537 104.93 12,647,947

7 Engro Corp 72,150 175.3 12,647,895

8 Fauji Fertilizer 110,337 114.63 12,647,930

9 Attock Petroleum 24,846 509.04 12,647,607

Total Investment 129,616,742