Rafael Nam and Abhishek Vishnoi
MUMBAI |
Fri Jun 15, 2012 12:27pm IST
(Reuters) - India's best known stock investor, billionaire Rakesh
Jhunjhunwala, doesn't much like the moniker of 'India's Warren Buffett'.
"It's not a fitting comparison.
In terms of wealth and success and maturity, he's far, far ahead," says
Jhunjhunwala in an interview at his office in a prime location in
Mumbai overlooking the Arabian Sea.
Much
like the famed Omaha investor, Jhunjhunwala has made a fortune from
some savvy investments - Forbes magazine puts his net worth at $1.1
billion, ranking him 41st on India's rich list - but the similarities
end there. Dressed simply in a white shirt and grey pants, he draws
heavily on a cigarette, burps loudly, tells ribald jokes and peppers his
interview with the cliches and one-liners that have become his
stock-in-trade.
The 51-year-old has
the brash confidence of a self-made man - he built his fortune from an
early bet on Tata Tea - and of a risk-taking investor.
"I'm
not a clone of anybody. I'm Rakesh Jhunjhunwala," he booms. "I've lived
the world on my own terms. I do what I enjoy. I enjoy what I do."
Unlike
Buffett, Jhunjhunwala has been an advocate of leverage, which he has
often used in his career and perhaps best defines his big, bold bet
investment philosophy.
"See, I'm a
risk taker," he says. "If I feel very opinionated, I can really put the
money on the table. I don't think too much deep research is needed. I
don't go into analysis paralysis," he says. "All you need is common
sense."
Following are the top six holdings held by Jhunjhunwala,
based on stock exchange filings.
COMPANY STAKE (%) YTD PERFORMANCE
(to June 13) (%)
Aptech 32.19 +10.6
A2Z Maintenance 19.10 +20.5
Viceroy Hotels 11.2 +42.4
Autoline Inds 10.25 +73.4
Zen Technologies 10.1 +17.7
Titan Industries 10.0 +27.5
For comparison, the NSE index, or Nifty, is up 10.7
percent so far this year.
VIRTUE OF RISK
"Trend
is your friend," he quips, adding that at a time of intense global
market volatility he is fully invested, yet cautious about adding too
much risk. He has, however, extolled the virtue of risk and profited
from being able to make big contrarian bets - as he did in the aftermath
of the September 11, 2001 attacks in the United States.
Markets,
he says, have priced in a Greek exit from the euro zone, but the bigger
concerns are about other vulnerable single currency members, a United
States that's "on steroids" and a "crisis of governance" in India. "When
there's doom and gloom, don't forget there's darkness before dawn," he
says.
Despite the concerns over
weak governance, he's still a believer in the India story that has made
him rich. "When a child is sick, the mother is concerned. It doesn't
mean the child's going to die," he says.
In
a country that reveres its gurus, Jhunjhunwala, with his large frame
and small glasses, would be easy to parody - there is a fake blog that
lampoons the investor's life - but thousands hang on his every market
move.
"Many clients ask when we
recommend stocks whether Rakesh has bought it, and what he's holding,"
said Chirag Shah, assistant vice president for dealing at broker Bonanza
Portfolio. "People follow him like anything. Whenever they come to know
that he's taken a stake in a stock, they try to invest in it."
For the record, he's bullish on retail, financial services, agriculture and software services, but he declines to elaborate.
A BUMPER CUPPA
Jhunjhunwala's
passion for playing the market began as a teenager, prompted by his
father, a government tax official, pointing out stocks that would react
to the day's news.
He made his
first big profit by borrowing what in 1986 was a sizeable sum to buy
5,000 shares in Tata Tea, confident that the markets had under-estimated
the potential of a company looking to grow at a time of rising yield
production. He trebled his money within months. "I was apprehensive, but
if you don't have confidence, you shouldn't come to the stock market.
You have to risk," he recalls.
Better, bigger investments followed, including a leveraged bet in the late 1980s on iron ore exporter Sesa Goa (
SESA.NS). He bought the stock at 60-65 rupees each and sold at 2,200 rupees.
His timing has been fortuitous. The Bombay Stock Exchange, Asia's oldest, introduced the benchmark
Sensex
in 1986 and markets developed swiftly after economic liberalisation
five years later. "I'm the right person at the right place with the
right attitude," he says. "If the Sensex had not gone up 100 times from
when I started, I could not have been successful."
The
index has dropped more than 9 percent in the past 16 weeks as India's
economic growth stutters, prompting a warning from Standard & Poor's
that its credit rating could be downgraded to junk status because of
political inaction.
RARE BREED
Today,
Jhunjhunwala presides over his investment firm Rare Enterprises, named
using his and his wife's initials, which has a dozen or so employees
whose sole job is to help him make his market bets. "This isn't a fund. I
have no money other than my own and my wife's," he says. "She's my only
client. I don't manage anybody's money except hers."
Jhunjhunwala's
office has three monitor screens and an ashtray. There is a large
conference table, statues of Ganesha, and framed copies of
Jhunjhunwala's 10 Commandments for Investing and 10 Commandments for
Trading.
Some of the commandments
are slightly misspelt, but that wouldn't seem to matter to him. "Even if
my wealth is 20 percent of what it is today, I'd smoke the same
cigarette, drink the same whisky, drive the same car, have the same
office, the same house, wear the same clothes, have the same wallet, eat
the same food," he says. "Money is not anything which is going to
affect me, or the way I live."
He says he will give away a quarter of his wealth.
Jhunjhunwala
may not take the trappings of his work too seriously, but he is
dedicated to trading, and portraits of well-known investors Peter Lynch
and John Templeton hang in the company's offices. There is also a bound
collection of his speeches covering his investment methodology, such as
evaluating corporate price-to-earnings ratios - a hark-back to his
studies in chartered accountancy. He also includes a prayer from the
Dalai Lama, and an eclectic compilation of quotations from Shakespeare
and Voltaire to George Soros and Buffett.
MIDAS TOUCH?
His financial disciples continue to be swayed by his track record. Shares in A2Z Maintenance and Engineering Services (
ATOZ.NS) jumped as much as 11 percent on May 23 after he and his wife disclosed buying 2.65 million shares of the company.
Do
all his investments turn to gold? He's not saying. He does not report
his holdings as a private investor, or dwell on past mistakes.
"People
will only know of my good side, and not the mistakes I've made. I know
what my mistakes have been, and what they've cost me financially. But
I'm not bothered about that because I only look at the end results," he
said.
Jhunjhunwala has no plans to
leave his business to his three children or burning ambition to found a
financial conglomerate, unlike other Indian billionaires such as Uday
Kotak, who started small but went on to build Kotak Mahindra Bank (
KTKM.NS).
"All
I've known is trading and investing. I don't want to do anything else
in life," says Jhunjhunwala. "I'll call it quits the day I die."
(Additional reporting by Divya Chowdhury; Editing by Ian Geoghegan)
Courtesy:http://in.reuters.com/
