TMP - March Update

Our key objective is to pick the right stocks at the right time by paying a fair price to

build a balanced portfolio which will enable us to outperform the markets and achieve

superior risk adjusted returns. We aspire to generate wealth by compounding money at a

healthy rate by spotting profit making opportunities in solid companies with strong

management which are available at a good discount to their intrinsic value.

Monthly Portfolio Update – April 1st 2015

‘s (TMP) – An Innovative Offline PMS

Portfolio companies of TMP

“ Specialists in discovering Multibagger stocks “

equity exposure = 98.5% Cash Exposure = 1.5 %

TMP Performance = 371 % Vs Sensex Performance = 70 %

[HBJ CAPITAL - THE MILLIONAIRE PORTFOLIO] April 1, 2015

Dear Members of "The Millionaire Portfolio (TMP)",

Indian Markets have had a healthy correction over the month of March. While the headline Index is down about

7%, the broader markets have corrected sharply. The bigger correction has been in the tier-2 cyclical stocks that had run up

largely on the back of unrealistic expectations. These corrections are healthy as it removes the froth and market participants

take a reality check on their expectations. Since our Portfolio didn’t have any low quality businesses, there hasn’t been any

impact on the overall returns.

The Macro economic data that has been coming out over the last many weeks has been pointing to a similar trend

that Indian economy and new CAPEX cycle is not going to pick up meaningfully over the next 2-3 quarters. Multiple factors

such as clamp down on subsidy spending, Unseasonal rainfalls, lower MSP price increases etc has created stress in the

economy. We believe that these are healthy adjustments for the improving the economic growth trend of the country over

the medium to long term. In case, Markets continue to correct – we will be happy to buy good businesses at decent prices.

Short term market movements are based on sentiment, Medium term movements are based on Liquidity and

Long term movements are based on earnings. The businesses that we have in our Portfolio have considerable earnings power

and will be able to grow profitably with the improvement in the country’s GDP growth. We will continue to stay invested in

such businesses as long as our Investment thesis holds true. At the same time, we are cognizant of the risks involved in

staying fully invested in an overheated market and hence may build some cash at the appropriate time.

One of the good things that is happening to our portfolio is that the Stocks that are looking overvalued to us are

prudently raising equity at extremely low cost of capital. This reflexive phenomenon would ensure that these stocks

continue to be healthy investments for us. Our portfolio bets such as HSIL, Cera Sanitary ware, Dewan Housing Finance,


Treehouse Education etc have all raised equity capital over the last 1-2 months at attractive prices. We hope that these

businesses manage capital prudently and continue to deliver strong returns on incremental capital deployed.

Our view that “Indian equities are in a secular bull market and will provide strong wealth creation opportunity

over the next decade” stays intact and we would hence use every Market correction to accumulate good businesses that are

run by credible Managements at attractive valuations.

Good Market Wisdom for this Month : (Interesting Excerpts from George Soros, David Tepper etc)

"The Market does not beat them. They beat themselves, because though they have brains they cannot sit tight" - Jesse

Livermore.

"The single greatest edge an investor can have is a long-term orientation" - Seth Klarman.

“There is enough liquidity in the system. The world's combined GDP was about $55 trillion in 2008, and $140 trillion was the

debt. Today, the debt has moved higher to $200 trillion, but the world's GDP has moved slowly towards $70 trillion. To create


$15 trillion of GDP, it created $60 trillion of debt. The case with India is exactly the opposite”.

“Stock market bubbles don’t grow out of thin air. They have a solid basis in reality, but reality as distorted by a

misconception. Every bubble consists of a trend that can be observed in the real world and a misconception relating to that

trend. The two elements interact with each other in a reflexive manner.” - George Soros.

“I made two major discoveries in the course of writing: one is a reflexive connection between credit and collateral, the act of

lending can change the value of the collateral, and the other is a reflexive relationship between regulators and the

economies they regulate.” - George Soros.

“Whenever there is a conflict between universal principles and self-interest, self-interest is likely to prevail.”- George Soros.

“You have got to make decisions even though you know you may be wrong. You can’t avoid being wrong, but by being aware

of the uncertainties; you’re more likely to correct your mistakes than the traditional investor.”- George Soros.


“I’m only rich because I know when I’m wrong. I basically have survived by recognizing my mistakes. I very often used to get

backaches due to the fact that I was wrong. Whenever you are wrong you have to fight or take flight. When I made the

decision, the backache went away.” - George Soros.

“Money values do not simply mirror the state of affairs in the real world; valuation is a positive act that makes an impact on

the course of events. Monetary and real phenomena are connected in a reflexive fashion; that is, they influence each other

mutually. The reflexive relationship manifests itself most clearly in the use and abuse of credit. It is credit that matters, not

money (in other words, monetarism is a false ideology).” - George Soros.

“We invest in a lot of bonds and preferred (stock), which we can convert to equity. It not as risky as people make it out to

be.” - David Tepper, Appaloosa Fund Management.

“For better or worse we’re a herd leader. We’re at the front of the pack. We are one of the first movers. First movers are

interesting; you get to the good grass first, or sometimes the lion eats you.” - David Tepper, Appaloosa Fund Management.

“Non-consensus ideas have to be lonely. By definition, non-consensus ideas that are popular, widely held or intuitively

obvious are an oxymoron. Thus such ideas are uncomfortable; non-conformists don’t enjoy the warmth that comes with


being at the center of the herd. Further, unconventional ideas often appear imprudent. The popular definition of “prudent” –

especially in the investment world – is often twisted into ‘what everyone does.’” - Howard Marks, Oak Tree Capital.

“There is a time to make money and a time to not lose money.” - - David Tepper, Appaloosa Fund Management.

“Some of our best positions were ones we initially lost money on.” - - David Tepper, Appaloosa Fund Management.

I guarantee that in every great blow-up there has been at least one big-name investor involved all the way down. Don’t stop

your work on the downside because you can’t imagine so-and-so owner making a mistake. It happens all the time. —James

Chanos, Kynikos Associates.

I am putting S. Drunkenmiller as "Head of Research" for the same reason, 18-year olds are sent to war. You are too dumb,

young and too inexperienced not to know to charge. We around here have been around since 1968. This was 1978. I think a

big secular bull market is coming. We've all got scars. We're not going to able to pull the trigger. So, I need a young

inexperienced guy. But I think, you have got the magic to go in and lead the charge” – Drunkenmiller’s first job CEO.


“ FED’s monetary policy of low interest rates for the last 4 to 6 years combined with the current reluctance to raise interest

rates, despite strong economic data is leading to irrational risk taking and building bubbles in several asset classes including

Junk Bonds and Energy debt. For example : In 2006 to 2007, the period that is considered to be one of the most speculative

investment periods - 700 Billion Debt was raised. In 2013 and 2014, almost 1.1 Trillion in Debt has been raised and most

importantly last time only 28% of the debt was B-Rated but this time almost 71% of debt is B-Rated. Back in 2006-07, only

20% of the loans were covenants light. Now that number is 60%. This is going to end badly for Financial Markets. “

– Druckenmiller.

Regards,

Gokul Raj. P,

[Principal Fund Manager, HBJ Capital]

Date: April 1st 2015, Place: Bangalore, India.


Medium Term - Portfolio Guidance

• Accumulate more High Quality Stocks such as TV Today & City Union Bank :

As Markets have rallied strongly, we find a dearth of good Investment opportunities. For Investors with low Equity allocations, we would suggest them to accumulate good businesses that are available at attractive valuations such as TV Today and City Union bank aggressively.

City Union Bank (CUB) is expected to be a consistent compounder in our Portfolios. TV Today Network is a more nimble position in which our Investment rationale is predicated on the decrease in carriage costs and the operational leverage kicker.

• Looking forward to lighten Portfolios little bit :

With Markets moving into frothy valuations zone, we would like to lighten portfolios little bit by booking profits in some of our stocks. Our Equity allocation of > 95% would not sustain for long. We believe that a Small Cap/ Mid Cap portfolio such as ours should have attractive cash allocation to take advantage of market volatility.

• Close watch on the High Allocation Stocks :

Our Stocks including HSIL, Cera Sanitary ware and Indiabulls Housing Finance contribute almost 10% each to our Equity portfolio and hence there is very little room to make mistakes here. While this concentration increases the Volatility in the Portfolio, we believe that all these Stocks are good Businesses and hence would be good for Long Term wealth creation.

TMP Connect [For new members joined TMP]

New Members who has joined during last two months need

to replicate TMP Connect ONLY, Since they are joining in

between hence a replica of actual TMP is created for them.


Your TMP Connect [Only buy these stocks listed below] Allocation % - If your

planned portfolio size is say

10 Lacs, you will be

allocating Rs40K towards

Cera Sanitary ware at CMP

which is 4% allocation.

Please follow “TMP

Update” which is released

once a month for further

buying price range for all

stocks in the portfolio.

Stocks which are not there

in this list, will slowly be

phased out of the main

portfolio. Hence, don’t buy

them unless initiated.

Because of the fall in

markets, new members

will be able to buy certain

stocks at better prices .


Company Name Allocation (as a % of your total planned portfolio size)

Cera Sanitary ware 3 %

Poly Medicure 3 %

Sanghvi Movers 5 %

EClerx/ Persistent 5 %

City Union Bank (CUB) 7 %

Mahindra Finance 4 %

Bajaj Electricals 4 %

CARE Ratings 5 %

TV Today Network 6 %

HSIL 4 %

Biocon 3 %

Indiabulls Financials 5 %

VA Tech Wabag 6 %

Greaves Cotton 4 %

Heritage Foods 5 %

Cash 31 %

Total 100 %

This is for new Clients who would like to have a little broader Portfolio

with additional stocks and would like to avoid the strongly run-up names.

We still believe that the TMP Portfolio itself would do well. So, this

Portfolio is only optional and useful for few clients alone.


Additional Sub-Portfolio for New Clients in addition to the Existing Portfolio (No Changes)



TMP Update [For existing members]

Existing TMP (as on 1st April, 2015) – No Changes


Summary of TMP


• Our Stock Exposure is currently above 95% of the overall Portfolio. Going forward, we would like to increase Cash levels by a few Percentage points.

• The total number of stocks is at 13. We intend to run a fairly tight and balanced portfolio. Hence, we would not like to add new stocks without proper replacement.

• During every significant fall, we shall be deploying cash pretty aggressively in fundamentally good companies . We would build some Cash position for this from some of our Existing stocks.

• Incase of opportunities where risk-reward is very attractive than any of our existing portfolio stock, we would take a rational decision to swap the current share with the new stock.

SIP – Systematic Investment Plan


Current Buy list – March 2015

Stock Buying Range

SIP Money Allocated

City Union Bank 80-100 5000


- Since our Current Equity Exposure is over 95%, we are not able to add stocks which are quoting at attractive valuations. But as Individual Investors, if your Exposure is lower or your Total Capital size in Equities is increasing with regular monthly Income – this Slide will help you to know stocks which are currently at good buying levels and you can Invest money in those.

- We believe this will help our clients to take advantage of Market conditions on a consistent basis with guidance from our Research team. Make sure, if you are saving regularly – Invest in the stocks listed in this Slide constantly and you can see the rewards going forward.

- Also make sure that your Portfolio Allocation %’s are similar to our recommended allocation and match our Portfolio over time. This will help you to maintain a Balanced Portfolio which performs under all Market conditions and compounds your wealth at a consistent rate. Also, other than Our Portfolio stocks – the stocks where you can do SIP has been mentioned in the next Slide.

Monthly SIP Investment = 10000 Rs Total Accumulated Savings till now = 55000 Rs

This Month’s Investment = 5000 Rs

We have saved 5K this month


Next Update – April 30, 2015

As mentioned in the previous reports, we would be giving regular update reports at the end of each month. In addition to this, we would be buying/ selling stocks whenever there is a good opportunity ( we expect to have a new Stock addition during this Month at an appropriate time) and also keep you updated on the changes.

In the next Month’s Update, we would provide details on the following,

• Market Update and Portfolio Strategy.

THANK YOU


Documents

TMP - March Update