From Rakesh Jhunjhunwala, who spotted Titan's potential early on, to Raamdeo Agrawal, who bet on Hero Honda in the '80s, successful Indian investors believe in long-term bets
Parag Parikh, 60
Chairman & CEO, PPFAS
Everything about Parag Parikh is old school, from his trademark suspenders to his investing approach. He’s a money manager who sticks to his principles even when the market whispers otherwise. And his mantras are simple: Buy good businesses that you understand, bet long-term and, most importantly, buy cheap. “Today you get so many tips from the market. Many people will be able to talk about value investing. The challenge is walking the talk,” he says.
He set up Parag Parikh Financial Advisory Services (PPFAS) in 1983, and runs it on strict value investing principles where the biggest condition is to not invest in businesses it doesn’t understand. For instance, during the dotcom bubble of the ’90s, some of Parikh’s clients left him because he didn’t snap up dazzling, often confusing, tech companies. This even led to some self-doubt. But then, a course in behavioural finance at Harvard University offered him clarity. Also, the ensuing crash gave him conviction. “What is required is control over your own emotions. You have to develop discipline and think long-term. We believe in the law of the farm: You cannot sow something today and reap tomorrow.”
Inevitably, he laments the change in the financial markets. “The only ethos is ‘How do I get money from this guy’s pocket?’ Every innovation in the financial market is always against the interest of the user,” he says. And everyone is in a race for more assets under management. “If you really like infra or real estate, there are so many schemes available—why don’t you invest in them?” he asks. ‘Slow and steady’ may be old school but it still works for Parikh.
Image: Mexy Xavier
—Shravan Bhat
Chairman & CEO, PPFAS
Everything about Parag Parikh is old school, from his trademark suspenders to his investing approach. He’s a money manager who sticks to his principles even when the market whispers otherwise. And his mantras are simple: Buy good businesses that you understand, bet long-term and, most importantly, buy cheap. “Today you get so many tips from the market. Many people will be able to talk about value investing. The challenge is walking the talk,” he says.
He set up Parag Parikh Financial Advisory Services (PPFAS) in 1983, and runs it on strict value investing principles where the biggest condition is to not invest in businesses it doesn’t understand. For instance, during the dotcom bubble of the ’90s, some of Parikh’s clients left him because he didn’t snap up dazzling, often confusing, tech companies. This even led to some self-doubt. But then, a course in behavioural finance at Harvard University offered him clarity. Also, the ensuing crash gave him conviction. “What is required is control over your own emotions. You have to develop discipline and think long-term. We believe in the law of the farm: You cannot sow something today and reap tomorrow.”
Inevitably, he laments the change in the financial markets. “The only ethos is ‘How do I get money from this guy’s pocket?’ Every innovation in the financial market is always against the interest of the user,” he says. And everyone is in a race for more assets under management. “If you really like infra or real estate, there are so many schemes available—why don’t you invest in them?” he asks. ‘Slow and steady’ may be old school but it still works for Parikh.
Image: Mexy Xavier
—Shravan Bhat
Ashish Dhawan, 45
Director, ChrysCapital Investment Advisors
Having cut his teeth in the US investment sector, Ashish Dhawan returned to India in 1999 to start ChrysCapital. It manages $2.5 billion across six funds and has made over 60 investments—it is among the few PE firms to make 100-times-plus returns.
It is all about getting the sector call right and being prepared to stay invested for the long term, he says. Consider how, in 2002-03, he invested 40 percent of his fund’s capital in financial services. “We believed in the long-term dynamics [5 to 15 years] of financial services and knew that the market was becoming conducive,” says Dhawan. “For the next five years, I am bullish on financial services again. The sector got affected in the last few years due to bad loans, slowing growth, etc.”
Dhawan’s strategy: Investing in businesses he understands, taking a contrarian approach, having a disciplined risk aversion and diversification theme, and focusing on long-term fundamentals. “When we invest, we have a context on the sector—its growth rate, market share, losses and gains, regulatory changes. Historical perspective is equally important.” Dhawan took such a call in 2008 when ChrysCapital invested $180 million for 5 percent in HCL Technologies. “In 2007 to mid-2008, everyone loved domestic companies. We invested in HCL Technologies betting on the fact that one of its largest verticals was infrastructure management services. No one saw that. HCL was the best in that business.” In end-2013, ChrysCapital offloaded nearly 2 percent of its HCL stake for $500 million.
Image: Amit Verma
—Deepti Chaudhary
Sanjay Bakshi, 48
Managing Partner, ValueQuest Capital LLP
As a student at the London School of Economics, Sanjay Bakshi read an article about Warren Buffet. He learnt that Buffett believed markets were inefficient. This was contrary to what he was being taught. “I read that Buffett wrote wonderful letters to his shareholders, that were available on request,” says Bakshi. “I sent him a request and he sent me the letters.”
It was a life-changing experience for Bakshi who decided to return to India and practise value investing. Over the years, he identified and invested in high-quality businesses run by solid management teams.
He invests in companies that take on minimal debt, and cites the example of Relaxo Footwears Limited, which began by selling slippers, grew in market volume, and expanded its range to include high-end footwear. Bakshi invested in Relaxo in 2011, when its stock was trading at Rs 100. In three years, it went up to Rs 400.
“I invest in businesses that have enduring competitive advantages and scalable business models run by owners who are both honest and competent.”
This strategy has seen him through a sometimes fickle market. “You are investing in businesses that generate so much cash they usually don’t need much debt, and there is little financial risk.” But Bakshi too has fallen prey to ‘value traps’—stocks that are cheap for a reason. “It could be because the promoters are crooked, or there is no cash, or the books are cooked.”
Bakshi’s advice is to identify high-quality businesses run by promoters who do not gamble on a speculative bet. And “do not listen to brokers.”
Image: Amit Verma
—Shabana Hussain
Managing Partner, ValueQuest Capital LLP
As a student at the London School of Economics, Sanjay Bakshi read an article about Warren Buffet. He learnt that Buffett believed markets were inefficient. This was contrary to what he was being taught. “I read that Buffett wrote wonderful letters to his shareholders, that were available on request,” says Bakshi. “I sent him a request and he sent me the letters.”
It was a life-changing experience for Bakshi who decided to return to India and practise value investing. Over the years, he identified and invested in high-quality businesses run by solid management teams.
He invests in companies that take on minimal debt, and cites the example of Relaxo Footwears Limited, which began by selling slippers, grew in market volume, and expanded its range to include high-end footwear. Bakshi invested in Relaxo in 2011, when its stock was trading at Rs 100. In three years, it went up to Rs 400.
“I invest in businesses that have enduring competitive advantages and scalable business models run by owners who are both honest and competent.”
This strategy has seen him through a sometimes fickle market. “You are investing in businesses that generate so much cash they usually don’t need much debt, and there is little financial risk.” But Bakshi too has fallen prey to ‘value traps’—stocks that are cheap for a reason. “It could be because the promoters are crooked, or there is no cash, or the books are cooked.”
Bakshi’s advice is to identify high-quality businesses run by promoters who do not gamble on a speculative bet. And “do not listen to brokers.”
Image: Amit Verma
—Shabana Hussain
Samir Arora, 52
Founder, Helios Capital
Samir Arora rose to prominence during the dotcom boom in the ’90s when he was a fund manager with Alliance Capital. Over the years, he’s eschewed financial jargon and judged a company’s worth by its fundamental investment philosophy. Arora says it’s common for investors to get self-righteous and blame others when they lose money. His advice is as pared down as his investment strategy: “Stop blaming others. Learn from your mistakes.”
He anticipated that India’s economy would change significantly after the liberalisation of 1991; he set up the India Liberalization Fund in 1993. Its focus was to buy stocks of public sector companies that were up for privatisation. It was, however, an idea whose time had not yet come. Instead, Arora focussed on sectors such as banking and insurance which were being opened up to private companies. He made handsome returns on HDFC and benefited from timely calls on banking stocks.
Apart from PSUs, he stayed ahead of the curve by focusing on a second investment category—industries that are “new” for India and under-penetrated even in urban markets. These included retail, media, liquor and multiplex chains. “The intention is to anticipate and recognise change early,” he says. He calls his third investment category “new, new”—this currently includes technology and pharma.
Arora is a canny investor with a knack for sniffing out potential gems, but he is also cautious. “We learnt that looking at low P/E stocks without considering the level of debt is risky. Many a time the stock looks cheap on P/E, but the balance sheet must be considered closely.”
Founder, Helios Capital
Samir Arora rose to prominence during the dotcom boom in the ’90s when he was a fund manager with Alliance Capital. Over the years, he’s eschewed financial jargon and judged a company’s worth by its fundamental investment philosophy. Arora says it’s common for investors to get self-righteous and blame others when they lose money. His advice is as pared down as his investment strategy: “Stop blaming others. Learn from your mistakes.”
He anticipated that India’s economy would change significantly after the liberalisation of 1991; he set up the India Liberalization Fund in 1993. Its focus was to buy stocks of public sector companies that were up for privatisation. It was, however, an idea whose time had not yet come. Instead, Arora focussed on sectors such as banking and insurance which were being opened up to private companies. He made handsome returns on HDFC and benefited from timely calls on banking stocks.
Apart from PSUs, he stayed ahead of the curve by focusing on a second investment category—industries that are “new” for India and under-penetrated even in urban markets. These included retail, media, liquor and multiplex chains. “The intention is to anticipate and recognise change early,” he says. He calls his third investment category “new, new”—this currently includes technology and pharma.
Arora is a canny investor with a knack for sniffing out potential gems, but he is also cautious. “We learnt that looking at low P/E stocks without considering the level of debt is risky. Many a time the stock looks cheap on P/E, but the balance sheet must be considered closely.”
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