R K Damani

Slide-1: Background
 Mr White & White- always dressed in white and white
 started his career as a trader in ball bearings and jump into
battlefield of Bulls And Bear
 Earned his name as one of India’s finest value investors
 Quit the markets suddenly in 2001
Slide-2: Strategies
 Inspired by the legendary value investor Chandrakant Sampat
 Investment strategy of Mr. Damani was simple
 Promptness In Cutting Losses
 Keep Himself In A Low Profile- not very articulate and does not
communicate much
 Great listener. He patiently hears out everybody and never scoffs at
any idea

Slide-3: Reining in the Big Bull

 In contrast of Big Bull, Harshad Mehta Mr Damani, on his part,
was bullish on the market only till February 1992
 The market took off vertically between February to April, and
Damani was trapped badly
 When the scam got exposed, the market went into a tailspin. Mr
Damani not only regained the lost ground, but walked away with a
tidy profit.
 Harshad Mehta was to lock horns with Mr Damani once more in
1998, but this time with fatal consequences for the Big Bul

Slide-4: Rise And Crash In Stock Market

 Rise In Stock Market In 1998
 Stock Market Crash of 1998

Slide-5: Boom of 1999-2000

 Mr Damani found himself a bit out of depth during the technology
boom of 1999-2000
 Technology was the buzzword at the bourse
 Ketan Parekh had taken over as the reigning Big Bull
Slide-6: Controversy and Semi-retirement

 Accusations that he belonged to bear cartel who colluded to hammer

stock prices
 Under the scanner of regulatory authorities during stock market crash
of 2001
 Stuck in classic & conservative rules of trading.
 D-Mart is the retail chain. It seeks to provide a one-stop shopping
experience for the entire family, meeting all their daily household
needs.

Slide-7: The comeback: The return of the old fox

 In feb-2007, Mr Damani returned to the stock market with new energy.
 In March 2007: Investors were jet-ti-soning Tata Steel shares on worries.
 Damani sensed too much pessimism- steadily gathering shares of the
steel in small lots over the past month
 His fortunes turned and he had hit it off again, like an old hunter returned
to the jungle.

Slide-8: Damani: Bear or Bull

 A bull believes the stock market will go up
 A bear is someone who believes the stock market will go down
 Like politics there is no place for permanent bulls or permanent bears
 Radhakishan Damani: In like a bear, out like a bull
 AMRESH KUMAR

Thank you Nirupa,

Nmaskar, myself Amresh Kumar. I will explain the background of Mr
Radha Kishan Damani and his trading strategy.

Slide-1: Background

Mr Radha Kishan Damani is a reclusive investor. He is popularly known

as ‘Mr White & White’ because he always dressed in white. Also as an investor
his career has been almost spotless.

It is interesting to know that Mr Damani started his career as a trader in

ball bearings which was so far from the battlefield of bulls and bears i.e. stock
market. After the death of his father, he shut shop and joined his brother’s stock
broking business. This business was inherited from their father.

At that time he was just 32 years old and he had less knowledge of
market dynamics but he was very keen to learn.  So he was not a value investor
to begin with; he began his career in the stock market as a speculator. But
successful speculation is just one facet of Mr Damani.

Damani had actually earned his name as one of India’s finest value
investors. He built his fortune by identifying winners among multinational
company stocks during the late 80s and early 90s.

He got big-bang victories in stock market, but he quit the markets

suddenly in 2001. Over the next five years, he built the D’Mart chain. In
February 2007 Mr Damani successfully reinterred in stock market.

Now I would like to probe the man and his investment strategy.

Slide-2: Strategies

As we already new that initially Mr Damani was a speculator. But

quickly he realise that speculation was not the best way to grow capital. He was
inspired by the well known value investor Chandrakant Sampat and started
playing for the long term.
 Often, investment strategy of Mr. Damani was simple. When he bet on
Indian Shaving Products (Gillette) his reasoning was: “People will shave no
matter what.”

His several initial bets get flopped. But he steadfastly refused to follow
the herd, and he concentrated on evolving his own trading strategies. Gradually,
he began getting his calls right, and within the next couple of years he
established himself among the big boys on Dalal Street.

He has great kind of patience . But when he is convinced about any stock,
he would buy his desired quantity in one sweep. And if he felt that a stock had
run its course, he would dump his holdings at one go,

Another aspect of Mr Damani’s strategy that he was very prompt in

cutting losses. Mr Damani himself once said: “Cutting your losses is like
performing a surgery on one arm with the other; painful, but it has to be done,
otherwise the arm may have to be amputated.

Again Mr Damani likes to keep himself in a low profile. He is not very

articulate and does not communicate much, but he is a great listener. At the end
of it all, he would back his judgement and instinct.

  All along, Mr Damani made some great calls both on the long and short
sides of the market. Yet, many players viewed him as a bear rather than a bull.

In 1992, Mr Damani emerged victorious in a epic battle with Big Bull,

Harshad Mehta and established as a stock market legend.

Slide-3: Reining in the Big Bull

In 1992, Harshad Mehta shot into prominence because of the daring rally
in share market. But it fizzled out in April 1992. On the other hand Mr Damani
was bullish on the market only till February 1992. Even as the Big Bull was
pumping up the shares, Mr Damani began to go short. He reasoned blue chips
had already run up a lot and fundamentals no longer justified the rally.

The market kept rising, but rather than cutting his losses, Mr Damani
rode on his conviction and doubled up his short positions. “The market took off
vertically between February to April, and Damani was trapped badly. His losses
were huge. But then, it emerged that Harshad had been siphoning off funds
from the banking system and using them to buy stocks. When the scam got
exposed, the market went into a tailspin. Mr Damani not only regained the lost
ground, but walked away with a tidy profit.

Slide-4 : Rise And Crash In Stock Market

 Towards the end of 1998, the overall market sentiment began to improve.
Before long, the market was in the grip of a bull run led by technology stocks,
which would peak out in February 2000. Damani continued to trade but he had
begun scaling down the number and size of his bets. He was preparing for a
self-imposed exile from the market. He was always passionate about retailing,
but were there other factors also that influenced Mr Damani to retreat from
Dalal Street.

It is interesting fact that like any other operator, Demani made most of his
money being on the long side of the market. He had a finger on the pulse of the
market and would not hesitate to sell short if the situation called for it.
Unfortunately, his short (selling) calls attracted more attention than some of his
long (buying) calls.

No I request Mr Alingjor Ekka to continue the presentation.

 ALINGJOR EKKA

Slide-6: Boom of 1999-2000

Technological Boom

Some people say that Mr Damani found himself a bit out of depth during
the technology boom of 1999-2000. He stuck to the classic rules of trading.
Under this rule he felt that short selling shares were overvalued and going long
on the undervalued.

In spite of sound understanding of — cement, automobile, steel sectors,

these sectors were out of favour of Damani. Those days technology was the
buzzword at the bourse, and irrespective of whether those companies were
making money or not, investors were falling over each other to buy into them. 

In the mean time Ketan Parekh had taken over as the reigning Big Bull,
and established himself as a champion of new economy stocks. Mr Damani’s
old school strategies did not work well for him in this period.

Slide-7: Controversy and Semi-retirement

In the year 2001, Mr Damani came under controversy. There were

accusations that he belonged to bear cartel who colluded to hammer stock
prices. So he came Under the scanner of regulatory authorities during stock
market crash of 2001.

Also as we saw in previous slide his classic & conservative rules of

trading was not performing well under the technological boom. So he quit the
markets suddenly in 2001. Over the next five years, he built the D’Mart chain
and gained respect as an entrepreneur.

D-Mart

Now I would like to speak about D-Mart. D-Mart is the retail chain. D-
Mart seeks to provide a one-stop shopping experience for the entire family,
meeting all their daily household needs. A wide selection of home utility
products is offered, including foods, toiletries, beauty products, garments,
kitchenware, bed and bath linen, home appliances and much more.

Since D-Mart first opened its doors in the Mumbai region in 2000, it has
grown into a trusted and well-established shopping destination in the Mumbai
Metropolitan Region (Mumbai, Navi Mumbai and Thane).  D-Mart is now
looking forward to growing its stores across India.

Slide-8: The comeback: The return of the old fox

In feb-2007, Mr Damani returned to the stock market with new energy.

His right calls on Tata Steel and State bank of India made them aware of his
return to the stock market.

In March 2007: Investors were jet-ti-soning Tata Steel shares on worries

the company may end up with too much debt, to finance its acquisition of Corus
Steel. The stock was down nearly 20% from its high of Rs 519 touched on
January 29, 2007 two days before Tata Steel won a long bidding war for Corus.

Damani sensed too much pessimism. He had been steadily gathering

shares of the steel in small lots over the past month. He was convinced it was
time to take the plunge. Mr White & White ordered his dealers to double up
their purchases. This was his first big bet since his return to the stock market in
early 2007 after a six-year hiatus.

Soon, data showed Tata Steel’s cost of debt for the Corus acquisition
would be lower than market fears. The fortunes turned and the stock touched a
new high of Rs 622. Damani, stock market icon, had hit it off again, like an old
hunter returned to the jungle. The reclusive investor had seen an opportunity in
the chaos and made a killing.

Slide-9: Damani: Bear or Bull

Now the question arises whether Damani is a bull or bear. At first i would
like to define bull and bear.

A bull is someone who believes the stock market will go up and a bear is
someone who believes the stock market will go down. A bull market is a rising
market and a bear market is a falling market.

It is said that in politics there are no permanent friends or permanent

enemies; only permanent opportunities. A similar rule extends to the stock
market as well, where there is no place for permanent bulls or permanent bears.
Only those ready to swear by this axiom can hope to survive the rough and
tumble of Dalal Street, where fortunes are made and lost every day.

If I analyse Damani’s behaviour in stock market we found that internally

he looks like a bear, out like a bull.

With the market having rallied by more than 25% in less than a month,
most market watchers are now pinning hopes on a steady, if not dramatic,
recovery. But Mr Damani does not seem to be as sanguine. While he is said to
have squared off most of his short positions in time and even built up sizeable
long positions by the time the rally gathered steam, he does not want to press his
luck for now. Circles close to the shrewd investor claim that he has sold off a
significant chunk of the positions he had built in stocks like Tata Motors and
Century Textiles.

Patience being his prime virtue, Mr Damani is now sitting on a tidy

packet, waiting for fresh macro and micro indicators before deciding on his next
big bet. Market talk is that Mr Damani is among the few local players who have
been consistently making money on his trading calls over the past one year,
even as the market has been going through one of its most turbulent phase.

And while Mr Damani goes to extremes to stay away from the media
glare, he nevertheless enjoys a strong following in market circles. For instance,
he was among the few players who took a contrarian view on Tata Motors when
the stock price plunged on a deluge of rating downgrades by broking houses.
The stock has been one of the best performing frontline stocks over the past
month, gaining over 50%.