Investment Expertise CLIENT INTRNTNL STOCKS INDIAN STOCKS PRECIOUS METALS

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1 EQUITY ADVISORY

2 Investment Expertise INTRNTNL STOCKS CLIENT INDIAN STOCKS PRECIOUS METALS

3 Investment Expertise Indian Stocks: Portfolio comprises Indian stocks, managed by R&D Capital but held in client s own demat accounts. Service available to both Indian and International clients. International Stocks: Portfolio comprises of international stocks domiciled in the US, Canada and Europe. Service available to both Indian and International clients. Precious Metals: Portfolio of physical gold, silver, platinum and palladium stored in insured vaults in foreign countries (New York, Salt Lake City, London, Zurich, Singapore and Melbourne). Also buy closed-end trusts that own gold, silver, platinum and palladium. Service available to both Indian and International clients.

4 Investment Philosophy: Value Investing

5 Value Investing The art of determining the intrinsic value of businesses conservatively Applying a margin of safety to the estimate of the business value Having the discipline to wait until the price demanded by the seller of the business is below the estimate of intrinsic value subject to the margin of safety The concept of Value Investing was pioneered by Benjamin Graham: Its most proficient exponent till date is Warren Buffett, a student of Graham. When executed right, it is the only repeatable investment method that generates consistently good results under all market conditions.

6 Value Investing The Model

7 Five Steps of Value Investing Circle of Competence The first step to be a successful value investor is to evaluate one s own circle of competence and stay within. It is not humanly possible to understand all the businesses in the world. Therefore, an investor must determine which types of businesses he understands best and stick to them. That s not to say he shouldn t look to expand his repertoire with continued learning. But he must think of investing only after he has mastered the fundamentals of the investment. There is no shame in declaring your limitations as Warren Buffett famously declared his limitations in understanding technology businesses. There is also no shame in passing up complex businesses. Again quoting Buffett in this regard There are no extra points for degree of difficulty in investing.

8 Five Steps of Value Investing Determining Intrinsic Value Once an investor has determined businesses within his circle of competence, then the next step is to determine their value. The most reliable valuation tool is the discounted cash flow method where the future cash flows of a business are estimated and then discounted to the present with an appropriate discount rate which compensates the investor adequately for undertaking the risk of investing, for forgoing current consumption for future consumption.

9 Five Steps of Value Investing Applying a Factor of Safety Everything we use in our daily life has a factor of safety built into it, the most common being elevators and bridges. A similar concept is used in value investing to safeguard an investor s capital and to offer downside protection. Human beings are naturally optimistic creatures and we project good times to last from now till eternity. This optimism often percolates into the investing arena as well. Ben Graham understood this psychological propensity and introduced a factor of safety to discount his estimate of value. For instance, if he believed the stock of Company A was worth $100/share, an investor can apply a factor of safety of say 30% and estimate $70/share as the Consider Buy point at which he d purchase shares of Company A.

10 Five Steps of Value Investing Purchase Discipline Once intrinsic value for a company is determined and a factor of safety is applied to that value, an investor must wait patiently for the market to offer shares of that company below Consider Buy price. This step involves oodles of patience because during euphoric market times, it requires a disciplined value investor to sit tight, perhaps for months or even years on end, even though the temptation is the join the party and partake in the euphoria.

11 Five Steps of Value Investing Market Recognition of Value If and when the market offers shares of a desired company below its Consider Buy price, the value investor will make a purchase and then wait patiently for the market to recognize his estimate of value and reward him. This process also requires mountains of patience and continued vigilance. If in the meantime the share prices moves lower, the investor must have the discipline to stay the course or even buy more to average down his cost price.

12 The Equity Advisory Team Ganesh Rathnam Ganesh is the Portfolio Strategist. With over 13 years of investing experience, his expertise lies in the Ben Graham-Warren Buffett style of value equity investing. Ganesh possesses a comprehensive understanding of free market economics and international monetary systems. In his role as Portfolio Strategist, Ganesh s responsibilities include unearthing undervalued international equities and commodities and also determining the overall asset allocation. Previously, Ganesh held the position of Equity Research Specialist with Boston-based Fidelity Investments, one of the top three mutual fund companies in the world, with over US$1.5 trillion in assets under management. Ganesh advised two portfolio managers on their portfolio holdings and built an enviable track record.prior to joining Fidelity, he served as the lead bank analyst at Morningstar Inc. in Chicago, United States, where he managed a team of four analysts and also covered the world s leading banks such as J.P. Morgan, Citigroup and Bank of America. Ganesh holds a Master s degree in Mechanics from the University of Minnesota and later obtained his M.B.A. from the Carlson School of Management, also part of the University of Minnesota.

13 The Equity Advisory Team Rana Pritanjali Rana is an Equity Research Specialist. She focuses on Indian stock portfolio. Her role is to identify Indian equities which have wide moats, steady businesses and are available at an attractive valuation. Previously, Rana has worked as a Senior Analyst in Credit Suisse for approximately 3 years. For the last year, she was working in Credit Suisse s Singapore office where she was responsible for P&L production and Valuation analysis for Global Arbitrage Trading. Additionally, she reviewed and analyzed complex structured trades in various asset classes including equities, fund link products and convertible bonds. Rana has a bachelor s degree in Civil Engineering from IIT Delhi. While at IIT Delhi, she interned at Deutsche Bank and Schlumberger. Sapna Jha Sapna is an Equity Research Specialist. Her focus is on Indian equities especially the underpriced ones. Sapna has served as an Associate Vice President at AMBA Research, Bangalore. In this role, she provided research assistance for the emerging market portfolio of a California-based pension fund. Sapna has over 6 years of experience in equity research covering both Indian as well as International markets. Prior to moving to Bangalore, Sapna worked with Bank of America in Mumbai as Senior Research Associate, covering stocks in the pharmaceutical sector. Sapna has a bachelor s degree in Engineering (Civil) and an MBA (finance) from ICFAI, Hyderabad.