Motiwala Capital’s letter to shareholders for the third quarter 2014.

Dear Investors,

US Markets were mixed in the recently ended quarter with increased volatilty. On an aggregate basis, accounts managed by Motiwala Capital returned -2% in the third quarter and 5.1% year to date. The performance information is shown in the table below:

Motiwala Capital

Motiwala Capital: Portfolio Activity

Special Situations:

We participated in six new special situations in the quarter. One of the investments that were nicely profitable was the CBS / CBSO split off and tender offer.

Generals:

Portfolio exits: We sold out of two positions in the quarter.

Tesco PLC (ADR) (OTCMKTS:TSCDY): We sold our entire position in the UK based retailer Tesco Plc. Tesco’s business continued to remain under pressure from competition. The results have been poor since we purchased the shares over two years ago. Our thesis of a turnaround in business did not work out. We were lucky with the timing of our sale around $15. The stock price has declined significantly since our sale. Most client accounts showed a mid single digit gain over the two-year holding period owing mostly to the dividends earned.

We also sold a closed end fund that specialized in recent spin-offs. I came to the conclusion that it would be difficult to determine when to sell and hence decided to exit the position with a measly gain.

Motiwala Capital: New positions

Qualcomm, Inc. (NASDAQ:QCOM): Qualcomm is the leader in technologies related to wireless communication. It earns royalty income on its huge patent portfolio and also manufactures chipsets for mobile devices. QCOM has a rock solid balance sheet with $32 billion in cash and investments and produced free cash flow of $8 billion last year with a market cap of $123 billion. We paid ~11x this free cash flow (ex-cash) which is an attractive price for this high quality company.

International Housewares Retail Co Ltd (HKG:1373): IHR is a Hong Kong listed housewares retail chain with primary operations in Hong Kong, Singapore and Malaysia. We purchased our shares after selling pressure caused by the reduction in stake by the Private Equity owners. IHR has a market cap of HKD 1.8 billion. We purchased shares at 12x P/E (not backing out the cash on the balance sheet) and a dividend yield of 2%.

Motiwala Capital: Reduced positions

We continued selling down our profitable position in Hess Corp. (NYSE:HES)) on price appreciation. We also reduced our position in Vodafone (VOD) as its business performance continues to weaken further. All of our sales so far this year looked poor while the equity markets were going up straight. After the recent 4-week slide in stock prices, our sales do not look so bad.

Motiwala Capital: Increased positions

During the quarter we increased our positions in Outerwall Inc (NASDAQ:OUTR), Blucora Inc (NASDAQ:BCOR), Prosafe SE UNSP ADR (OTCMKTS:PRSEY), North Atlantic Drilling Ltd. (NYSE:NADL), CTC Media, Inc. (NASDAQ:CTCM), Oracle Corporation (NYSE:ORCL) and a microcap on share price declines. I am grateful to everyone who has entrusted me with their capital and appreciate all the referrals. Please contact me if you are interested in our managed account services.

Sincerely,

Adib Motiwala

Portfolio Manager

400 E Royal Lane Suite 290

Irving TX 75039

817.689.5115

This commentary candidly discusses a number of individual companies. These opinions are current as of the date of this commentary but are subject to change. All information provided is for information purposes only and should not be considered as investment advice or a recommendation to purchase or sell any specific security. While the information presented herein is believed to be reliable, no representations or warranty is made concerning the accuracy of any data presented. This communication may not be reproduced without prior written permission from us.

Past performance is no guarantee of future results. Motiwala Capital performance is computed on a before-tax time weighted return (TWR) basis and is net of all paid management fees and brokerage costs. Performance figures are unaudited. Performance of individual accounts may vary depending on the timing of their investment, the effects of additions, and the impact of withdrawals from their account. 2011 performance is from the period March 14, 2011 to Dec 31, 2011. The same period was used for S&P 500 and Motiwala Capital.