PMS

January 2020

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Equity Investments – Risk mapping of strategies
• While we certainly
High Thematic/ Sectoral believe high risk doesn’t
Funds/closed
ended guarantee high return,
but the potential of each
investment should be
Mid Cap/ Small Cap
Funds mapped

• Low risk also means

Multicap Funds/
PMS lower volatility and
Expected predictable investment
Return avenues. Outcomes of
Large Cap Funds
which could be measured
in higher probability
terms
Index Funds
/ ETFs
• Black swan events affect
all categories
Low

Low Risk High

For illustrative purposes only. Not indicative of any specific investment.

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PMS Selection Process
Return
• Well Articulated Thought Process
• Defined Investment style – Growth Vs Value Efficient
Qualitative • Transparent
Portfolio
• Skin in the game & only activity
• Absent from major Platforms / Focus on investing

• Demonstrated track record and experience

Quantitative • Consistency in performance
• Fee aligned with performance

• No Lock in Risk
Operations • Open to communication
• Accessibility to fund manager

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SIMPL PMS
Strategy –Value Investing, Primary
Portfolio - Multicap Portfolio Holdings
Research driven
Sr. No. Company Name Holding %
• For YTD FY2020 – SIMPL PMS is up by 4.51% against blended benchmark (-5.08%)
• Reasons for outperformance - 1 P&G Health 12.2%
2 Divis Labs 7.6%
• Cash - For the Financial Year 2019-20, the portfolio manager took a call to invest 3 HDFC Bank 7.3%
patiently on account of market volatility and since quality companies are available 4 Sanofi India 7.2%
at high valuations. After a good span of 2 years the fund manager has invested ~75- 5 HDFC Ltd 6.7%
80% of the total capital across portfolios. 6 GE Power India 4.8%
• Stock Selection - Allocated decisively to some of the stocks which were available at 7 Amrutanjan Healthcare Ltd 4.7%
reasonable valuation – Procter and Gamble Health (10.3%), Sanofi (5.4%). These 8 Kennametal India Ltd 4.4%
performed well. Recently, the portfolio manager has added companies available at 9 Tata Chemicals Ltd 4.3%
reasonable valuations like Bayer CropScience (3%), United Spirits (2%). The fund 10 Akzo Nobel India Ltd 4.3%
manager remains bullish on his top holdings.
Financial Absolute Return Cumilative Return
• Sector Diversification - The portfolio has exposure to 9 MNC companies (35%). Year SIMPL Nifty 50 Nifty 500 SIMPL Nifty 50 Nifty 500
Portfolio is diverse across sectors like MNC Pharma, Agro Chemicals, Banking and
Financials, Capital Goods. FY10* 15.40% 13.90% 13.80% 15.40% 13.90% 13.80%
FY11 9.80% 11.10% 7.30% 26.71% 26.54% 22.11%
• Q2 FY20 Result Update - The portfolio companies posted numbers which were
broadly in line and the weighted average earnings growth of the portfolio stood at FY12 11.40% -9.20% -8.70% 41.15% 14.90% 11.48%
4.75% YoY. Companies that outperformed estimates were P&G Health (Merck), FY13 10.00% 7.30% 5.10% 55.27% 23.29% 17.17%
Pokarna, MCX Ltd., Akzo Nobel and HDFC Bank Ltd. FY14 40.50% 18.00% 17.70% 118.15% 45.48% 37.91%
• SIMPL PMS forms a part of Value investment category. FY15 77.50% 26.70% 33.60% 287.22% 84.32% 84.25%
• The fund manager has maintained a low churn in his portfolio and continues to derive FY16 -7.90% -8.90% -7.50% 256.63% 67.92% 70.43%
conviction on his portfolio. FY17 23.50% 18.50% 23.90% 340.44% 98.98% 111.16%
• The strategy focuses on buying stocks with high margin of safety with good quality business FY18 14.50% 10.30% 11.50% 404.30% 119.48% 135.44%
run by quality top management and create long term portfolio FY19 4.90% 14.90% 8.40% 429.02% 152.18% 155.22%
YTD FY20 4.51% 4.68% 2.16% 452.87% 164.00% 160.74%
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*PMS started from Sep 2009 As on 31 Dec 2019
Why SIMPL is a relevant PMS
• Post Midcap & Small cap fall valuations have become attractive in broader markets, the fund manager took a call to invest
patiently and preferred investment in liquid stocks over opportunistic stocks.

• Primary research driven –Portfolio manager & his team is involved in research of companies and do not rely on sale side
research. Gets the comfort through multiple channel checks on products & company.

• Invest in right business at right value–portfolio is created with 3 to 5 years perspective with low churn

• Cash is a Strategy - Prefers to hold cash rather than investing in a momentum market. (During 2018, the fund manager raised
35-50% cash across portfolios)

• The Fund manager runs a multicap portfolio diversified portfolio across 24 stocks. Fund’s allocation: Large Cap – 25.68%, Mid
Cap – 42.05%, Small Cap – 32.27%

• Why are we recommending –

• We feel value investors are getting opportunity to invest in Indian markets after a good gap of 7 years. Uncertainties
emerging out of events are better used by long term value investors to build long term portfolio. We remain constructive
on Indian fundamentals and believe earnings will pick up due to structural reforms in place

• Fund managers like SIMPL will be better placed to use current volatilities to build long term robust portfolio with lower
volatility and will be nimble footed at the sight of risk
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2Point2 Capital
Strategy –Value Investing, Primary
Portfolio –Mid and Small Cap Portfolio Holdings
Research driven
• For the YTD FY2020 – 2Point2 Capital was up 7.60% against blended Sr. No. Name of the Company Holding (%)
benchmark (-6.25%) 1 Muthoot Finance Ltd. 14.01%
• Reasons for outperformance - 2 Ujjivan Financial Services Ltd. 10.80%
• Stock Selection - The fund manager has a sizeable exposure to financial 3 DCB Bank Ltd. 10.24%
companies (~56%). He allocated funds to companies like Manappuram 4 Nesco Ltd. 9.88%
Finance Ltd. (8.61%), Muthoot Finance Ltd. (13.49%), Ujjivan Financial 5 Garware Technical Fibres Ltd. 9.03%
Services Ltd. (10.55%), Arman Financial Services (5.12%) and DCB Bank
6 Manappuram Finance Ltd. 8.37%
(10.32%) which performed well. Q2 FY20 - earnings growth of 49.3%
YoY. 7 Tata Elxsi Ltd. 6.58%
8 Goodyear India Ltd. 6.37%
• What stood out for us – The fund manager took a call to invest in 9 Arman Financial Services Ltd. 5.08%
quality NBFCs, gold finance companies and small banks during the NBFC
10 Tata Investment Corporation Ltd. 4.17%
crisis. This call generated a significant outperformance.

• Buying growth stocks at right value – The fund managers being value Financial Absolute Return
investors believe that however growth oriented a company is, it should
yet be bought at the right price. Year 2Point2 Nifty 50 Midcap 100
2017 26.80% 7.10% 22.20%
• Concentrated portfolio with 12 stocks
2018 16.60% 10.30% 10.30%
• 2Point2 Capital forms a part of the Value investing category. 2019 14.40% 14.90% -1.90%
• The portfolio is expected to have low churn. YTD FY 2020 7.60% 4.68% -6.33%
• The strategy focuses on buying stocks with high margin of safety to safeguard
against volatility and create a long term portfolio
*PMS started from July 2016
Cumilative Return
2Point2 Nifty 50 Midcap 100
26.80% 7.10% 22.20%
47.85% 18.13% 34.79%
69.14% 35.73% 32.23%
81.99% 42.09% 23.86%
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As on 31 Dec 2019
Why 2Point2 Capital is a relevant PMS
• Mid and Small Cap valuations have become attractive in broader markets.

• Primary research driven – The portfolio managers spend 4-6 months on micro analysis and on ground research before
investing. They also perform extensive forensic diligence to weed out companies with questionable financials.

• Invest in right business at right value – Portfolio is created with 3 to 5 years perspective with low churn

• Cash is a Strategy - Prefers to hold cash rather than investing in a momentum market

• Current Exposure - Large cap – 19%, Midcap – 9%, Small cap – 71%

• Why are we recommending –

• We feel value investors are getting opportunity to invest in Indian markets after a good gap of 5 years. Uncertainties
emerging out of events are better used by long term value investors to build long term portfolio.

• We feel fund managers like 2Point2 Capital will negotiate with these volatility better as they focus on more on primary
research and have forensic research mindset

• Fund managers like 2Point2 will be better placed to use current volatilities to build a long term robust portfolio with
lower volatility and will be nimble footed at the sight of risk.

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Solidarity
Strategy – Growth Portfolio – Large Cap Oriented Portfolio Holdings

Sr. No. Company Name Holding %

• For YTD FY2020 Solidarity was up by 14.10% against blended benchmark
1 ICICI Bank 13.2%
which was down by (-0.22%)
2 HDFC Bank 7.7%
• 81.2% of the portfolio is invested and they hold 10.9% in cash. 3 JSW Energy 7.6%
• Allocation: Large Cap – 48.6%, Mid Cap – 16.5% and Small Cap – 23.9%. 4 United Spirits 5.8%
5 SRF Ltd 5.2%
• The portfolio is managed in 4 baskets
• Secular Leaders 6 Divis Labs 5.1%
• Emerging Leaders 7 NTPC 4.9%
• Transformers 8 SBI Life 4.5%
• Cyclical Leaders 9 Neogen Chem 4.5%
• The fund manager looks for businesses which have moat, leadership, high 10 Sequent Scientific 4.1%
ROCE and low debt. Performance:
• Q2 FY20 Result Update - The weighted average earnings growth of the Financial Absolute Return Cumilative Return
portfolio stood at ~9.16% YoY.
• Outperformers: HDFC Bank, SRF Ltd, Neogen, Sequent Scientific and
Year Solidarity Nifty 50 Nifty 500 Solidarity Nifty 50 Nifty 500
Garware 2017 20.50% 19.20% 24.30% 20.50% 19.20% 24.30%
• Underperformers: United Spirits, SBI Life and Max Financial Services 2018 19.20% 10.30% 11.50% 43.64% 31.48% 38.59%
• Solidarity forms a part of Growth strategy 2019 7.10% 14.90% 8.50% 53.83% 51.07% 50.38%
• The portfolio manager creates a customised portfolio from long term YTD FY 2020 14.10% 4.68% 2.16% 75.52% 58.14% 53.62%
perspective. 8
As on 31 Dec 2019
Why Solidarity is a relevant PMS
Solidarity constructs Multi Cap (large cap oriented) portfolios with moderate churn (~25%). The PMS will refrain from investing in
companies whose business structure they do not understand as well as companies with poor corporate governance.

The portfolio is managed in 3 baskets:

• Clear Leaders (60-70%) – They select companies who are clear leaders in a growing market. These companies should have a
robust business model along with a strong balance sheet.
• Example: HDFC Bank, Titan and Divi’s Laboratories

• Emerging Leaders (15-25%)– The companies selected in this basket are from the mid and small cap category which are on the
path of becoming clear leaders. Typically, these companies are dominant players in niche sectors.
• Example: Neogen Chemicals and Hester Biosciences

• Transformations/Deep Value (5-10%) – This basket contains good quality companies which are trading at a discount to its fair
valuations.
• Example: Max Financials, JSW Energy

Solidarity’s portfolio is built on the following core features:

• Businesses with large and growing opportunities (No threat from disruptions).
• Leadership or domination of a niche.
• Transparent management with decent track record.
• Quality companies whose businesses or cultures cannot be easily replicated.
• High ROCE and free cash flow generation.

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Thank You

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