This paper discusses historic patterns of Micro and Macro decisions and environment where the stocks have fetched exceptional returns in spite of the turbulent economic environment.

1. 2016
Atul Khekade
Atul Khekade is a serial entrepreneur,
financier and Advisor.
The Cases of Exceptional stock
market returns in turbulent times

2. 2
The volatility in global equity markets in the recent times has left a bad taste
with many investors. With fears of global economy going in jitters, many
investors are clueless and have started questioning whether the stock market
is a safe place to invest at all. This case based white paper discusses patterns
that repeat itself irrespective of the state of the global economy and yields
exceptional returns in a 3 to 7 year horizon.
About the Author :
Atul Khekade is a serial entrepreneur, financier and advisor. Atul built a
global distribution system for general aviation and was invited to write
editorial for an edition in Forbes Magazine. Atul has advised several
companies on raising capital and restructuring. Atul has been featured in
many publications such as Businessweek, rediff.com and Entrepreneur.com.
For Asset Management/Wealth Management/Portfolio Management inquiries
anywhere in the global markets, Atul and his team can be contacted on the
following contact details :
Email : atul@netzcapital.com
Phone : +1 415 513 0026 (US & Worldwide)
+91 9930403019 (Asia Pacific)
Linkedin :
https://www.linkedin.com/in/atul-khekade-9076b36

3. 3
Index
1. Introduction
2. Blue-Chip Investing in turbulent times
3. The causes of Exceptional Stock Market returns
a. Price movements of commodities/Raw materials
b. Growth through Franchising
c. Entry of Private Equity/Venture Capital Company
d. Management Restructuring
e. Supply Capacity in strong demand (Strong Macro Factors)
f. Disruptive Product/Technology with household potential
g. The High Risk Derivatives Market
4. Cases of Exceptional Returns
a. Apple Computers
b. Dollar General Corporation
c. Tesla Motors
d. Natural Health Trends
e. Barratt Developments
f. EasyJets
g. McDonalds
h. Starbucks
i. Domino’s Pizza
j. Jubiliant Foodworks
k. TVS Srichakra
l. V2 Retail
m.SpiceJet
n. Amara Raja Batteries
5. Risk Assessment
6. Conclusion
7. Asset Management

4. 4
1. Introduction
What made Apple computers stock go from $1 per share in the early 2000 to $95 a share
in 2012?
What made Dominos Pizza stock go from $6 a share in 2009 to $131 a share that it is
today?
What made Tesla Motors stock go from $20 a share to $200 a share in 6 years?
What made TVS Srichakra stock go from Rs. 160 ($2.39) per share in 2013 to Rs.
2800($42) per share in 2015?
Wasn’t the market volatile in those times? Wasn’t the fear of weak global
economy looming all over during this period?
In spite of all the economic factors and turbulent times, how did these stocks manage
to achieve exceptional gains?
We have tried to study the cases of exceptional stock price movements in the past 10-15
years and relate it to a pattern of macro and micro scenarios and decisions.
It is very interesting to note that the history and the patterns keep repeating itself. A
continuous study of these patterns may provide a secret key to finding the opportunities
for exceptional returns in the stock market during the turbulent times.
An average investor is generally exposed to the news and media to such an extent that
it gets difficult to identify these patterns among the constant display of illusion. These
days, the news alerts constantly pop on the Smartphone screens. So the individual is
only like to follow the wave than to predict and encash from it.
Success in stock market investments is a lifetime effort and no one can ever achieve it
as a goal. It is more of a journey or a process. The volatility of the markets keeps certain
risks widely exposed. However, the liquidity that these markets provide, can’t be
matched any other medium of investment. Analyzing and searching case based patterns
of exceptional returns in the past can help an investor identify cases that can fetch
similar returns in the future.

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2. Blue-Chip Investing in Turbulent Times
Most people invest in blue-chips as everyone feels it’s a safe bet. Well, it
definitely is most of the times. But looking at the volatility of global markets, the
age old theory of investing may not work in the current times.
Age Old Theory :
Buy Hold
With the volatility of the markets , earning money from Bluechip stocks has
become a game of trading in cycles. Stocks with good dividend payouts are the
ones where one can stay invested. But looking at the market volatility, the new
mantra for fetching returns from Blue-chips stocks has definitely changed.
New Theory in Volatile markets:
Buy Hold Sell Hold
Image Source: Heiken Ashi

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So why is this happening?
Well, primarily because of the following factors:
• Incremental use and disruption in Technology for the way we do our everyday
jobs
• Sharp Commodity Price movements
• Major shift of trends e.g. conventional energy to green energy
• Growing Concern about carbon emissions and Environment
• The growth of media, news and smartphones
What used to be steady growth blue-chips in the traditional markets have found it
tougher to maintain growth in the turbulent times.
e.g. If we look at Volkswagen Share Price movement in the last 1 year
$245 in 2015 March $116 in 2016
So if you would have bought a Volkswagen stock with your hard earned money back in
2015 just because it was a blue-chip, it would have nearly halved your money by now.
The simple problem is that the too big to fail theory does not work anymore. The bigger
the company gets, the more it gets exposed to the wide array of problems that can
bring it down. For Volkswagen, the problems are emissions scandal, hence there was a
massive drop. But you can look into stock price movement of BMW or Daimler AG or
any major blue-chip, you can see almost a 20-40% drop in its prices.

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3. The Causes of Exceptional Stock Market Returns
Our analysis to study micro and macro factors of the companies that have fetched
exceptional returns has indicated a particular combination of decisions and economic
scenarios. Time and over again these combinations have given similar outcomes in most
of the cases. Although there are nearly 100s of such combinations, looking at the scope
of this paper to introduce these to an investor, we have tried to cover only a few.
a. Price Movements of Commodities/Raw Materials
What are the major expenses in manufacturing business? The cost of raw
materials. Commodity prices are said to have followed a cycle of ups and downs
historically. From 2013-14, the commodity and raw materials prices have taken a
downfall. The reverse trend in prices of commodities as raw materials has turned the
trend for many businesses.

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It is not a rocket science that with cost of raw materials, profits of the companies start
reflecting it after one or two quarters.
Business Profitability
Refer to 4.f, 4.m and 4.k
b. Growth through Franchising
In spite of difference in skin color, religion, languages and races in humans, the
basic needs and likes are the same. This is the reason why a business doing
exceptionally well in one geography or city does well in rest of the world.
Franchisable businesses are those whose processes are driven by strong intellectual
property and it is very easy to scale up the business by opening a new outlet. The staff
can also be very easily trained for the new outlet.
Hence, for a business undergoing a rapid franchise growth, its balance sheets keep on
getting bigger and better. As the outlets of the business keep on growing, the revenues
and profits grow with the same pattern.

9. c. Entry of Private Equity/Venture capital companies
Venture capital and Private Equity companies specifically look for 2 kinds of
opportunities:
1. Growth Investing
2. Business Restructuring
As everyone knows the VC and PE funds work on a time horizon of delivering certain
minimum returns to the funds they raise capital from. While VC companies are more
growth investors, private equity companies
problems and fix the problems. In both cases there is a significant improvement in the
performance of the companies that they invest in.
When a business keeps running for several years by the same set of people, the
attachment or too much familiarity of the business makes the management overlook
the following factors:
a. New areas/avenues for growth
b. Measures of Cost Reduction
c. Business Efficiency
Refer to 4.g, 4.h, 4.i and 4.j
Entry of Private Equity/Venture capital companies
Venture capital and Private Equity companies specifically look for 2 kinds of
Business Restructuring
As everyone knows the VC and PE funds work on a time horizon of delivering certain
minimum returns to the funds they raise capital from. While VC companies are more
growth investors, private equity companies typically enter a large business with
problems and fix the problems. In both cases there is a significant improvement in the
performance of the companies that they invest in.
When a business keeps running for several years by the same set of people, the
attachment or too much familiarity of the business makes the management overlook
New areas/avenues for growth
Measures of Cost Reduction
9
Venture capital and Private Equity companies specifically look for 2 kinds of
As everyone knows the VC and PE funds work on a time horizon of delivering certain
minimum returns to the funds they raise capital from. While VC companies are more
typically enter a large business with
problems and fix the problems. In both cases there is a significant improvement in the
When a business keeps running for several years by the same set of people, the
attachment or too much familiarity of the business makes the management overlook

10. 10
Private equity players typically conduct a significant research on micro and macro
factors before entering into a company. When they enter, they usually undertake major
cost reduction and take up activities to enhance company’s revenues. The horizon of
private equity turnaround is typically between 3 to 7 years. Naturally, the company
becomes much more valuable once the private equity or Venture Capital Company
enters the business.
Refer to 4.b,4.i,4.l and 4.n
d. Management restructuring
When a company restructures its management to add personnel having prior and
proven experience of solving the same set of problems previously, it is most likely
to perform better in the coming times.
Refer to 4.a and 4.m
e. Quality Product supply Capacity in strong demand (Favorable Macro
factors)
Everyone knows the theory of supply and demand. One of the easiest matrixes to
calculate is the supply capacity of the business for a product/service that has a very
clear demand. It also matters whether the market for the product is big enough so that
the entire supply available today or to be produced in the future still falls short of the
demand.

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f. Disruptive Product/Technology with household potential
A company which has produced an intellectual property to supply disruptive
product in a vast and growing demand market generally finds an uptrend. The
product or technology which is so disruptive that it is the only company in it’s
space and has proven initial profitability. It also matters whether the consumer
demand for the disruptive product is growing rapidly as well.
Disruptive products generally have a very high entry barrier. i.e. it is not very easy
to become the company’s competitor. The company also needs to demonstrate
an ability for it’s product to create it’s own demand.

12. g. The High Risk Derivatives Market
Derivatives market follows a highly volatile yet linear path based on the index or
stock price movement for which they are traded.
Warren buffet has quoted derivatives as “
destructions”
The derivatives have the capacity to make or wipe out the
While the derivatives option is considered highly risky, the fact that it can grow many
fold and follows a linear growth with the index can make it a tool for a calculated
risk.
One of the consistent patterns of the index is to oversell before
announcement or strategic decision at a global level. This overselling comes from
uncertainty or fear from the economic policy.
However, the fact that the policy announcements are made based on a strong
current and historic data related to
bounce back in index post the policy announcements.
The High Risk Derivatives Market
llows a highly volatile yet linear path based on the index or
for which they are traded.
Warren buffet has quoted derivatives as “The Financial weapons of Mass
The derivatives have the capacity to make or wipe out the fortunes.
While the derivatives option is considered highly risky, the fact that it can grow many
fold and follows a linear growth with the index can make it a tool for a calculated
One of the consistent patterns of the index is to oversell before a major policy
announcement or strategic decision at a global level. This overselling comes from
uncertainty or fear from the economic policy.
However, the fact that the policy announcements are made based on a strong
current and historic data related to jobs, production and inflation generally leads to a
back in index post the policy announcements.
12
llows a highly volatile yet linear path based on the index or
The Financial weapons of Mass
While the derivatives option is considered highly risky, the fact that it can grow many
fold and follows a linear growth with the index can make it a tool for a calculated
a major policy
announcement or strategic decision at a global level. This overselling comes from
However, the fact that the policy announcements are made based on a strong
jobs, production and inflation generally leads to a

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4. Cases of Exceptional Returns
a. Apple computers (NASDAQ: AAPL)
$1 in 2002 $100 in 2013
Major Micro and Micro Factors :
• Return of Steve Jobs in 1997 (Management Restructuring)
• Strong Demand in Laptop, smartphones and tab devices market
• Disruptive designs of i-phones, ipads and macbook with household potential
b. Dollar General Corporation (NYSE: DG)
$18 in 2010 $85 in 2016
Major Micro and Macro Factors :
• Buyout by TPG Private Equity
• Strong Growth through Franchising

14. 14
c. Tesla Motors (NASDAQ: TSLA)
$20 in 2013 $250 in 2015
Major Micro and Macro Factors :
• Disruption in Automobile industry with battery powered cars
• Government Financing and support for Green Energy and emission-less drive
d. Natural Health Trends (NASDAQ: NHTC)
$ 0.95 in 2013 $51 in 2015
Major Micro and Macro factors:
• Strong demand in beauty products market
• Growth through Franchising and direct sales across 40 nations

15. 15
e. Barratt Developments (LON: BDEV)
$110 in 2010 $581 in 2016
Major Micro and Macro Factors:
• Strong Real Estate demand in UK due to shortage of land
• Strong supply of developments in the market

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f. EasyJets(LON: EZJ)
$345 in 2011 $1915 in 2015
Major Micro and Macro Factors:
• Strong Passenger growth in Aviation
• Fall in Oil Prices boosts profitability
• Supply of Travel add-on products e.g. hotels, cars, holidays

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g. Mcdonalds (NYSE: MCD)
$13 in 2003 $123 in 2016
Strong Micro and Macro Factors:
1. Steady demand in Organized and Fast Food
2. Easy supply of organized and retail spaces
3. Strong Growth through Franchising over 36,000 outlets worldwide
h. Starbucks (NASDAQ: SBUX)
$17 in 2011 $62 in 2015
Strong Micro and Macro Factors:
1. Steady demand in Organized Coffee Spaces
2. Easy supply of organized and retail spaces
3. Strong Growth through Franchising over 23,450 outlets worldwide

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i. Dominos Pizza (NYSE: DPZ)
$3 in 2008 $131 in 2016
Strong Micro and Macro Factors:
1. Steady demand in Organized and Fast Food
2. Easy supply of organized and retail spaces
3. Strong Growth through Franchising over 10,000 outlets worldwide
4. Bought by Bain Capital, a Private Equity company in 1998
j. Jubiliant Foodworks (NSE: JUBLFOOD)
Rs. 227 in 2010 Rs. 1915 in 2015
Strong Micro and Macro Factors:
1. Manages Dominos Pizza Franchise Stores in India
2. Easy supply of organized and retail spaces
3. Strong Growth through Franchising over 1000 outlets in India

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k. TVS Sricharka (NSE: TVSSRICHAK)
Rs. 180 in 2013 Rs. 3000 in 2015
Strong Micro and Macro Factors:
1. Fall of Rubber Prices from 2011
2. Strong growth of Passenger Cars in India hence strong demand for tyres
Rubber Prices Chart

20. 20
l. V2Retail (NSE: V2RETAIL)
Rs. 6 in 2013 Rs. 70 in 2015
Strong Micro and Macro Factors:
1. Steady demand in Organized Retail
2. Easy supply of organized and retail spaces
3. Strong Growth through Franchising
4. Bought by TPG Capital, a Private Equity company in 2011
m. Spicejet (BOM: 500285)
Rs. 12 in 2014 Rs. 70 in 2015
Strong Micro and Macro Factors:
1. Strong Demand in Aviation Passenger Market
2. Drop in Oil Prices
3. Return of company’s original promoter Ajay Singh (Management Restructuring)

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n. Amar Raja Batteries (NSE: AMARAJABAT)
Rs. 200 in 2011 Rs. 1000 in 2015
Strong Micro and Macro Factors:
1. Strong Demand in Passenger cars Market
2. Sequoia Capital buys 1.4% stake in the company in 2011 (growth financing)

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5. Risk Assessment
As written earlier, success in stock market is not final, it is a journey and a
process. What we have tried to cover in this paper are some of the patterns which lead
to exceptional returns. There are plenty of more cases which would need further study.
Before going ahead with any investment, there is a substantial SWOT Analysis required
that leads to whether or not a company is a good potential investment in spite of
potential patterns for success.
There are various factors for which the company needs to be analyzed before making an
investment. Such as :
a. Price to Earnings Ratio
b. Price to Equity Ratio
c. Debt to equity Ratio
d. Dividend Yield

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6. Conclusion
What is a Good investment Return? 2 times? 4 times ? 10 times? The more the better?
Ideally, a good return on investment is something which outperforms the market,
inflation and increases the value of your money so as to realize you more buying power
than the one you originally had. The equity markets and economic conditions have
become so dynamic that for an investor who is looking to stay ahead of the market, it is
important to constantly look back in time and connect the dots.
7. Asset Management
For Asset Management/Wealth Management/Portfolio Management inquiries
anywhere in the global markets, Atul and his team can be contacted on the
following contact details :
Email : atul@netzcapital.com
Phone : +1 415 513 0026 (US & Worldwide)
+91 9930403019 (Asia Pacific)
Linkedin :
https://www.linkedin.com/in/atul-khekade-9076b36