Portfolio Management 1:01

Presentation at IIM, Calicut

ENAM Securities

13 August 2004

Some Key Concepts

Approaches to Portfolio Construction
Top Down v/s Bottom Up Value v/s Growth Think of Cycles nothing is linear

Client Requirements
Match Needs, Requirements and Abilities

Risk
Use Math & Computing as tools Make Bets Explicit Why are you diversifying?

Your OWN Portfolio?

ENAM Securities
August 2004 2

Elements of Portfolio Construction

Top Down

Growth Value Momentum

Bottom Up ENAM Securities

August 2004 3

Decomposing Approaches

Top Down

Asset Class

Country

Sector

Equities Bonds Currencies Property Commodities Oil Precious metals Natural Resources

Developed Markets Emerging Markets Regional markets

FMCG Pharma Services TMT Manufacturing Cyclicals

ENAM Securities

August 2004

Decomposing Approaches
Bottom Up

Value

Volume Price Efficiency: Costs Assets Restructuring

GARP

Momentum

Dividend Yield Price/BV Replacement Cost

Payback EV/EBIDTA P/E DCF

Technical Charts Reflexivity PE/G Option Value

August 2004 5

ENAM Securities

Some Lessons from History

Japan V/s UK in 1944 Korea V/s India in 1950 Singapore!

Hero Honda V/s Kinetic Honda Bharti V/s IDEA Infosys V/s HCL HDFC Bank V/s SBI

There is NO trade-off between Top- Down and Bottom up

ENAM Securities
August 2004 6

Think of Cycles!
Nature is cyclical, not linear!

Life Cycles

Business Cycles / Boom-Bust

Seasonality

Innovation / Schumpeter

Market Cycles

ENAM Securities

August 2004

Valuation Approaches
Value Growth Momentum

Illiquid

Institutional Favorites

Max Volume

Misunderstood

UVG Stories

News Flow

Hated/Uncovered

Imagine it!

Volatile

Appraised value

DCF or Option value

Technicals

In Reality, there is no distinction. Growth and Momentum are LongTerm/Short Term Value catalysts
ENAM Securities
August 2004 8

OUR VALUATION SCREEN

CM N OP Y A Arv I d geoni a C nm Ar y a i go a d M s no o at n M VL K A T 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 99 9 9 9 9 9 9 9 9 9 9 99 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 RC OE 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 -9 % 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9 % 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 RN OW 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9 % 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 -9 % 9% 9 9 % 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9 % 9% 9 9% 9 9% 9 9% 9 9 % 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 -9 % -9 % 9 9% 9 9% 9 9% 9 9 % 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 CL AC Sl s a / e RN OW C Ep a m p 9% 9 9% 9 9% 9 9% 9 9% 9 9 % 9% 9 9 % 9% 9 9 % 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9 % 9% 9 9% 9 9% 9 9 % 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 -9 % 9% 9 9 % 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 -9 % 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9 % 9% 9 9% 9 9% 9 9 % 9% 9 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . S L/ AE BOK LC 9 9 . 9. 9 9 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9. 9 9 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . WP C / A P TD A+ 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . -9 .9 9 9 . 9 9 . 9 9 . 9 9 . -9 .9 9 9 . 9 9 . 9 9 . -9 .9 -9 .9 -9 .9 9 9 . -9 .9 -9 .9 9 9 . 9 9 . -9 .9 9 9 . -9 .9 9 9 . -9 .9 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . -9 .9 9 9 . 9 9 . -9 .9 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . -9 .9 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . -9 .9 9 9 . 9 9 . -9 .9 -9 .9 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . S L/ AE E Q 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 OM P % 9 9 # ## ## 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9 % 9% 9 9% 9 9% 9 9% 9 9% 9 9 % 9% 9 9% 9 9% 9 9 % -9 % 9 % 9 % 9% 9 OM P OM P% OM P% OM P% OM P% % 9 9 9 9 9 9 9 9 9 9 9% 9 9% 9 9% 9 9% 9 9 % 9% 9 9% 9 9% 9 9% 9 9 % 9% 9 9% 9 9% 9 9% 9 9 % 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9 % 9% 9 9% 9 9% 9 9% 9 9% 9 9 % 9% 9 9% 9 9% 9 9 % 9 % 9 % 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9 % 9% 9 9 % 9% 9 9% 9 9% 9 9% 9 9% 9 9 % 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9 % 9% 9 9% 9 9% 9 9 % 9% 9 9% 9 9% 9 ### ## 9% 9 ### ## 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9 % 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 -9 % 9% 9 9 % 9% 9 9% 9 9% 9 9% 9 9% 9 9 % 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9 % 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9 % 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9 % 9% 9 9 % 9 % 9% 9 9% 9 9% 9 9% 9 9 % 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9 % 9% 9 9% 9 9% 9 9 % 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9 % 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9 % 9% 9 9 % 9% 9 9% 9 9% 9 9% 9 9% 9 9 % 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9 % 9% 9 9% 9 9% 9 9 % 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9 % 9 % 9 % 9 % 9 % 9% 9 9 % 9% 9 9 % 9 % 9 % 9 % 9 % 9 % 9 % 9 % 9% 9 9 % 9 % 9% 9 9% 9 9 % 9 % 9% 9 9% 9 9 % 9 % 9 % 9 % 9% 9 9 % 9% 9 9% 9 9 % 9 % 9 % 9 % 9 % 9 % 9 % 9 % 9 % 9 % 9 % 9 % 9 % 9% 9 9 % 9 % 9 % 9 % 9% 9 9 % 9 % 9 % 9 % 9 % 9 % 9 % 9% 9 9 % 9 % 9 % #I/! D V OR P M O M 99 9 9 / #I/! 9 D V 9% 9 9 % 9 9 -9 % 9 9% 9 9% 9 9% 9 9% 9 9% 9 9 % 9 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9 % 9 9 -99 9 % 9% 9 9 % 9 9 9% 9 9 % 9 OR P M O M 99 9 9 / 9% 9 9 % -9 % -9 % 9 9% 9 9% 9 9 % 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9 % 9 9 9 9 % 9 9 9 % 9 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 -9 9 9 % 9% 9 99 % 9 9 9 9% 9 9% 9 9% 9 9% 9 9% 9 9 % 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9 % 9 9 9% 9 9% 9 9% 9 #I/! 9 D V 9% 9 #I/! 9 D V 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 -9 % 9 OR P M O M 99 9 9 / 9% 9 9 % 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 -9 % 9% 9 9 % 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 -9 % 9% 9 9 % 9 % 9% 9 9% 9 9% 9 -99 9 % 9% 9 9% 9 -9 % 9% 9 9% 9 -9 % 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9 % 9% 9 9% 9 9% 9 9% 9 -9 % 9 9% 9 9% 9 -9 % 9 -9 % 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9 % 9 % 9% 9 9 % 9% 9 9% 9 9% 9 OR P M O M 99 9 9 / 9% 9 -9 % 9 9% 9 9% 9 9 % -9 % 9 -9 % -9 % 9 9% 9 9 % 9% 9 9% 9 9 % -9 % 9 9 % 9% 9 9% 9 -9 % 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 -9 % 9 % 9% 9 9% 9 -99 9 % 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 -9 % 9 -9 % 9% 9 -9 % 9 -9 % -9 % 9 -9 % 9 % -9 % 9 -9 % 9% 9 -9 % 9 9% 9 9% 9 -9 % 9 9 % 9% 9 -9 % 9 9% 9 -9 % 9 9 % 9% 9 9 % 9% 9 9% 9 9 % 9 % 9 % 9% 9 EP X M O M 99 9 9 / 9% 9 9% 9 9% 9 9% 9 -9 % 9 -9 % 9 -9 % 9 -9 % 9 9% 9 -9 % 9 -9 % 9 9% 9 -9 % 9 -9 % 9% 9 9% 9 9% 9 -9 % 9 9% 9 9% 9 9% 9 9% 9 9% 9 9 % -9 % 9 9 % 9% 9 9% 9 9 % 9 9 9% 9 -9 % 9% 9 9 % 9% 9 -9 % 9% 9 9% 9 -9 % 9 -9 % 9 9% 9 9 % -9 % 9 -9 % -9 % 9 -9 % 9 -9 % 9 -9 % 9% 9 9 % 9 9 9% 9 9% 9 -9 % 9 9% 9 9% 9 9% 9 9 % 9 % -9 % 9 % 9% 9 9% 9 9 % 9 % 9 % 9 % 9% 9

Nv ri oats
A hI d s i ni a a Ds Id e oni n a Egn Vvs ni e a e l IP i g R s n I d Np n ni i o a p KynB ks a ai r e l a

MO I C
M j lSo a u a hw n Pc l ro i S nr mat nr uda Fse e s

Bj jAt a a u o Hr Hna eo o d Pn b r c r u j Tat s a o TL O EC T S uui V Sz k

Ah s r i ce B s &o b a h Lm u B l M9 i a r Cduy a br

Cs o at l r Cl a - a ov o t Pl l e g e mi
Dbr au

9 9% 9 9 9 # ## ## 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9% 9 -9 % 9 % 9% 9 -9 % 9 % 9% 9 9 % 9% 9 9% 9 9 % 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9% 9 9 % 9% 9

H d ee i Lv r n
I da Sai g ni n hvn I t r ai nlB t o d nento a e f o s s

9% 9 -99 9 % 9 % 9 9 9 % -99 9 % 9% 9 9% 9 9 % 9 9 9% 9 9% 9 9% 9 9% 9 9 % 9 % 9 9 9% 9 9% 9 9% 9 -9 % 9% 9 9 % 9 9 9% 9 -9 % 9% 9 9% 9 9% 9 9% 9 -9 % 9 9% 9 9 % 9 9 9 % #I/! 9 D V 9% 9 #I/! 9 D V #I/! 9 D V 9% 9 9% 9 9% 9 9% 9 9 % 9% 9

IC T
Ka ok d Mi o ac r

Ns e et l P c r& a b r t o o Gme l Rcit& o a ek t Cl n m S B o s Cr K CnH ae

Bt n i r an i a

AB B
A sC c t la o o p Cri rA c n are i o r Ci a o nu ai h g Pe m c c t

Cmi s um n
E iEu m t l qi e g p n Ea sb G d elNro rn w ot n i l Hd sa Pw p s i ut n o e l n r u H d Se Pw o a i l oe n r

I gr o- a d nes l Rn l
Kar e Cnt uto venr o sr ci n OI Evt r T l a S e o R ah C e ti P v Snv A a ad k s i i Sms i e e n S aaEgns wr j n i e Wt i a S a sl ND r Wa ii d CorCe o u hm l Gd s N o c ol s e l oa ra I II da C ni Id G s m ni y u a p M r s e et a a Cm s d n

9 9 9% 9 9 9 9 % 9 9 9% 9 9 9 9% 9 9 9% 9 9 9 9% 9 9 9 9% 9 9 9 9% 9 9 9 9% 9 9 9 # ## ## 9 9 9% 9 9 9 # ## ## 9 # ## ## 9 9 9% 9 9 9 9 9 9 9 9 9 9 9 9% 9 9% 9 9% 9 9% 9 9% 9

MF R
A rg tW o l i h is n b l

Ai n a t s Pi s a n
BS I d AFni a C t k hmas e a Ce i l n c

ENAM Securities

August 2004

VALUATION BENCHMARKS
P /E 9 9 C N U E 9 9 O S MR
PG E I
AT C

SRI E E VC S

PG E

AT C

P A M/A R HR A GO

PG E

AT C

A T /A C UO N C

PG E

AT C

<9
HF DC 9 9 . 9 9 9 Atr I L s aD 9 9 . 9 9

Bj jA to aa u Id N pn n ia ip o T SS z k V uu i 9 S a a E gn s wr j n i e

9 9 . 9 9 . 9 9 . 9 9 .

9 9 9 9 9 9 9 9

9 9 9 9

<9 9

Mrc ai o

9 9 .

9 9

9 9

P na Ta to s ujb rc r MC I O Mn a toC e ic ls o s n hm a 9 9 . 9 9 9 S n r m a te e 9 u da F s n r

9 9 . 9 9 . 9 9 .

9 9 9 9 9 9

9 9 9 9 9 9

K olP a m n l hr a B r o g s Wlc m ur u h el o e

9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 .

9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9

9 9 9 Hr H n a 9 eo o d 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 . 9 9 9 9

<9 9

G n a kP a m le m r h r a Ar v ge o Gr a Rmde e mn e e i s Ac i s r he Cstr l a o S bC n mr k o su e Kd k oa 9 9 . 9 9 . 9 9 . 9 9 9 9 9 9 9 9 9 9 9 9 CI I RSL 9 9 . 9 9 . 9 9 9 9 9 9 9 9 R o eP ue c hn oln We - e e le y thL d r A b tt L b bo as E ec Mr k

<9 9
Po to & a be r c r Gml 9 9 . 9 9 9 9 Nv e t a ne 9 9 . 9 9 9 9 P r eDvs ak a i Nv r s o ati 9 9 . 9 9 . 9 9 9 9 9 9 9 9

<9 9
Cd uy abr Nstl e e C l a - amlv og te P l oi e Rc i & omn e ktt C l a Bi n i rta na 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9

S i ki eP a m m ln h r a th Pi e fz r

9 9 . 9 9 .

9 9 9 9

9 TLO 9 EC 9 9

-9 .9

9 9

9 9

H e h Mro o c st a i n

9 9 .

9 9

9 9

Db r au
Nm i a r

9 9
9 9

9 9
9 9 NI IT 9 9 . 9 9 9 9 Gx l o a 9 9 . 9 9 9 9

<9 9

H d sta Lv r i u n ee n

9 9 .

9 9

9 9

A te h p c T o a Co h ms o k

9 9 . -9 .9 9

9 9 9 9

9 9 9 9

Cl i a p D. Rd y r eds

9 9 . 9 9 .

9 9 9 9

9 9 9 9

<9 9
Go e ix e mtr B la M ir 9 9 9 . 9 9 9 9 S b xS s m u e y te s S n taS f a e o a o twr P la is o r S ty m o p a a Cm T 9 V 9 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 . 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9

9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9

>9 9

I da S a i g n i n h vn

9 9 .

9 9

9 9 9

B L otwr F S f ae V aS f i l ot su Di l i ta g Hg e S f a e u h s otw r I f sy T c no s e h H LT c n lo ie C eh o g s

ENAM Securities

August 2004

10

Think Client Management

WHO is the CLIENT?

WHAT does he want from you?

HOW are you shaping his expectations & mindset?

WHY should he stick to you?

Most clients would rather have their fund manager fail conventionally than succeed unconventionally.

Marc Faber
ENAM Securities
August 2004 11

CHANGING NEEDS OVER A LIFETIME

9 9 9 9 Income 9 9 9 9 9 BANK/FD Mutual Fund Pvt. Advisor
Daily Exps House Durables Own Business Equity/Bonds Property Art/Misc

ENAM Securities

August 2004

12

KYC and Thyself!

Relative
Asset Allocation Pvt. Banks / Pension Funds / Macro Funds/ Fund of Funds

Country Allocation Regional Funds Sector Allocation

Large Cap

Country Funds/ Mutual Funds

Small Cap

Absolute

HNW / PMS / Absolute Return Funds/ Hedge Funds

ENAM Securities

August 2004

13

Key Success Factors

BCA GLOBAL

Pvt. Bankers / Pension Funds / Macro Funds

Institutional Marketing Deployment of Large Pools Capital Preservation

Regional Funds

Marketing Scale & Scope Economist

BCA EMG MKTS

Country Funds

Fund Manager Technician

BCA CHINA INDIA FUNDS

Absolute Return Funds

Stock Picker

ENAM Securities

August 2004

14

Risk Mitigation
Formulas / Computers are tools, not cast in stone
Sterling Crisis LTCM

Markets discount the rate of change ; most metrics measure history

Understand logic of EMT, CAPM and Beta; do not be bound by it.

Risk is something I manage between my ears.

Warren Buffett
ENAM Securities
August 2004 15

Make Explicit Bets

Asset / Sector / Class
Use Computing to make interrelations and risk explicit; scenario modelling

Catalyst
Reflation ; Upgrading Debt Rating ; Margins

Valuation
Payback, DCF, etc

What will make you change your mind? Your weightage should not be led by overconfidence !

ENAM Securities

August 2004

16

IDEAL PORTFOLIO
PBTx FMCG SERVICES Zee l. edge marico <9 <99 <99 <99 >99 ITC SKB-CH P&G Castrol RCI/Cad HLL/ ISPL Nestle VSNL PHARMA AGRO MISC Essel Goodlas S.Honda AgrEvo Cynmde Foseco A Paints Wartsila HPP Cummins ABB Novartis Nalco Hoganas POWER ENGG AUTO ANCC I.Nippon Munjal TVS Bajaj P Trac E Valve IP Ring MICO Denso

<9

75%

Traf. Hse Revthi G.Norton A Copco Esab Carrier OTIS Ingersoll Honda Telco

Rhone Astra German Knoll Pfizer Wyeth Ranbaxy SKB-P Glaxo HMR

CRISIL T. Info WIPRO Ind Hotl WIH Infosys T Cook

S Fstnr

ENAM Securities

August 2004

17

Decompose | Decompose | Decompose

Sectors FMCG Pharma Banks IT Telecom Media Engg Autos Commodities Total Large Cap Medium Cap Small Cap Total

ENAM Securities

August 2004

18

Decompose | THEN | Consolidate

A good investor is a good businessman and vice versa
Age aeP rf lioMt ic g r g t ot o er s Sle as OID PT PT A D IV N W Db et NtB e lk W Cp k a g

OM P %

S le / N IK a s B

WgC p S le k a/ a s

RI O

RE O

D y iv /d

P V /B

E /E ID A V B T

P /E

P /G E

ENAM Securities

August 2004

19

Typical Career Path to Nirvana

Analyst Head of Research Fund Manager Abs. Manager Own Funds

Large Fund Manager

Marketing Guru

Even Larger Fund Manager

ENAM Securities

August 2004

20

How is your Portfolio Tilted?

OWN INTERESTS PROFESSIONAL COLLEGUES WORK COLLEAGUES

CLIENT TIME

FAMILY

BUILD A CONSCIOUS LIFESTYLE !

ENAM Securities

August 2004

21

HEAVEN AND HELL

AMERICAN SALARY ENGLISH HOME GERMAN CAR CHINESE FOOD INDIAN WIFE

AMERICAN WIFE ENGLISH CAR GERMAN FOOD CHINESE HOME INDIAN SALARY

YOUR REAL WEALTH = YOUR HAPPINESS = YOUR STATE OF MIND = WITHIN YOU

ENAM Securities

August 2004

22

SUMMARY
UNDERSTAND YOURSELF OBJECTIVELY

UNDERSTAND THE INVESTMENT LANDSCAPE

UNDERSTAND THE UNDERLYING INVESTMENT

UNDERSTAND THE MARKET PARTICIPANTS

FOLLOW BASIC PRINCIPLES AND STICK TO THEM!

BE HAPPY!

ENAM Securities

August 2004

23