Investors: A Cut Above The Rest

If it’s not so easy to identify great companies, it’s far more difficult to find the conviction to stay invested for years on end. Investors are often distracted at the drop of a hat by the news — and noise — and call it quits, that is, exit a great opportunity before a business can grow and mature. But the few who stay the course, and hold out through thick and thin are those who reap the fattest rewards.

Little surprise then that some of the giant names in the investing world are like entrepreneurs themselves — never quitting despite the bad times. None is more famous than Rakesh Jhunjhunwala, who has amassed a tidy fortune of $1.4 billion — purely through investing. While Jhunjhunwala is famous for his trading prowess too, the man is also one of the savviest old-time investors — holding huge stakes in Titan, Lupin and CRISIL for years together.

For the innumerable times the markets have not gone the right way, Jhunjhunwala, who started his investing journey with barely the few lakh rupees he borrowed, has stayed rock solid, buying companies when they are small but with the ability to grow. The man notes that one must invest in small caps which are likely to grow to be large caps. “The biggest challenge of investing is that you should recognise whether an organisation has the ability to scale up.”

For those who are carried away by the markets excesses, Jhunjhunwala offers some advice: “Markets make excesses but those excesses come to an end. You have to judge how long that excess will last.”

We have known Azim Premji as a business man, but his investing skills are no less sharp. The entrepreneur has built sizeable stakes in a host of Indian companies sometimes through buying stakes early. Look at just his investing side. Premji has stakes in many companies, worth $1.2 billion. Not much is known about how he selects his investments, and sometimes we wish we could hear more of the investor in him.

The restrained and media-shy Radhakishan Damani, known to be a mentor to Jhunjhunwala, is another veteran in the stock market almost since inception. The man has earned his investing stripes due to his ability to foresee changes in trend far in advance, and ride on them, much before the broader market was able to spot it. Not surprisingly, Damani’s stakes in various companies are now worth Rs 2,510 crore. Still, this is excluding his own venture, the fast-growing retailer, D-mart, that is seeing a steady growth in scale and size.

Others such as Ashish Dhawan started off as venture capitalist before turning to investing. Over the years, Dhawan built his reputation for investing in undervalued companies, or those undergoing a structural shift. His stakes in some listed enterprises is now worth Rs 1,265 crore. He lately pointed out that investors should think long term as India is going to do well over the next 20 years, and that one should not merely think of five years.

Till some time back, Vijay Kedia was not mentioned on the front pages of newspapers. Nowadays, though, whenever he buys a stake in any new company, the purchase makes instant headlines. For him, the key to become successful at investing is to keep it simple and bank on great managements. “No investing strategy can come close to a great management,” he says. “If the management has the credibility, half the research is done. It does not matter which car, as long as you have a good driver.”

Kedia also believes that managements should be honest, hungry and smart. He reckons that when managements are honest, they take care of themselves and shareholders; when they are hungry, they want to grow their businesses, and smart managements are able to navigate the bad times. Kedia has stakes worth Rs 376 crore, largely in small companies which he identified early enough.

Kedia notes that “the job of an investor is to keep oneself updated as to what is happening around the world and in various segments of the market”. One of Kedia’s investing tenets has been to spot those sectors that are on the cusp of growth.

Many other famous investors have done fabulously well on the bourses. Shivanand Mankekar has stakes worth Rs 550 crore, while Ashish Kacholia is another successful investor (Rs 505 crore), who started with Prime Securities. Dolly Khanna has stakes worth Rs 183 crore, with many of those purchased when they were at rock-bottom prices.

Of course, over the years the stock markets have also been rewarding the risk takers and savvy investors. For instance, when Jhunjhunwala began his career as a rookie in the stock markets, the BSE Sensex was hovering at 354 points. Now at roughly 26,000 points, the bellwether index has delivered steady returns of 14.9 per cent till date.

But this super rich investor list isn’t all about compounded returns over the years. It’s also about the remarkable ability of these investors to have invested in some of the best companies that have been around in the last three decades. For as Kedia says: “If you spot the segments that will grow much, much faster than the market, you will be able to make it big as well.”