- Rakesh Jhunjhunwala
Jhunjhunwala
grew up in Mumbai, India where his father is posted as an Income Tax
Officer. He graduated from Sydenham College and thereafter enrolled at
the Institute of Chartered Accountants of India.
Jhunjhunwala
is the chairman of Aptech Limited and Hungama Digital Media
Entertainment Pvt. Ltd. and sits on the board of directors of various
Indian companies such as Prime Focus Limited, Geojit BNP Paribas
Financial Services Limited, Bilcare Limited, Praj Industries Limited,
Provogue India Limited, Concord Biotech Limited, Innovasynth
Technologies (I) Limited, Mid Day Multimedia Limited, Nagarjuna
Construction Company Limited, Viceroy Hotels Limited and Tops Security
Limited.
Rakesh Jhunjhunwala Success Story from 5k to 1.8$ Billion
Rakesh
Jhunjhunwala, the name that needs no introduction. The legendary
investor who is known as the Warren Buffet of India. Lets check out the
success story of Rakesh Jhunjhunwala and his journey from 5000 Rs to
8000 Crore.
Rakesh Jhunjhunwala was born on 5th
July 1960. He father was an Income tax officer. His father was
interested in stocks and used to discuss about the stock market with his
friends. Rakesh as a child would listen to them. Once he asked his
father why the price fluctuate. He told him to check the news, it makes
the price to fluctuates. This was his first lesson of stocks market. He
got fascinated by stocks and found it interesting. He expressed his wish
to get into stock market to his father. He told him to do whatever he
wanted in life but at least get professionally qualified. Rakesh then
took up chartered accountancy and completed his CA in 1985.
After
completing the CA he told his father that he wanted to go in the stock
market. His father reacted by telling not to ask him or any of his
friends for money. Earn and trade with your money. He started his career
in 1985 when the BSE Sensex was at 150. He made his first big profit of
Rs 0.5 million in 1986 when he sold 5,000 shares of Tata Tea at a price
of Rs 143 which he had purchased for Rs 43 a share just 3 months prior.
. Between 1986 and 1989 he earned Rs 20–2.5 million. His first major
successful bet was iron mining company Sesa Goa(now Sesa Sterlite). He
bought 400,000 shares of Sesa Goa in forward trading, worth Rs 10
million and sold about 2-250,000 shares at Rs 60–65 and another 100,000
at Rs 150–175. The price rose to Rs 2200 and he sold some shares.
Jhunjhunwala
bought 6 crore shares of Titan in 2002-03 at an average price of around
Rs 3. The stock is currently trading at 390 Rs level and his investment
value is now 2100 crore, which made around 35 lakh per hour for him. In
2006 he bought lupin around 150 Rs which is now trading at 1100 levels.
He bought crisil around 200-300 levels which is now at 1800. Likewise
there are so many stocks in his portfolio that made huge money for him.
His philosophy
Rakesh
Jhunjhunwala believes in power of mistakes. He says its the mistakes
that made him to learn and become a better investor. he says. “If you
don’t believe the markets are supreme, you will never admit that it was
your mistake. If you don’t admit that it is your mistake, you will never
learn. To succeed in the stock market, not only is the ability to learn
from one’s mistakes vital, he says, but also to blame only oneself for
it. “I don’t blame the promoters of companies. I blame myself. The
promoter is what he is. I have to recognise that. He is not what I
expect him to be.” Jhunjhunwala says what he has learnt in life is to
try and earn money in trading and to invest it in stocks.
His believe on India
Jhunjhunwala
says he is bullish on the country growth since he entered the stock
market. He insists the Indian economy will grow by 9-10 percent, though
that may need a transition of two to three years. Jhunjhunwala’s thesis
is that Indians will save $1 trillion a year, and even if 10 percent of
that money—$100 billion —flows into the markets, there will be a tsunami
on the bourses. “So I remain bullish that, for the next 20 years, we
could see a bull run like the one Wall Street had from 1987.”
His daily routine
He
wakes up at 7.30 and does some exercise. At 9 am he watches TV to get
update about market opening. At 10 he gets ready for work after having
breakfast. Around 11.30 he reaches his office talks to his people,
checks mails, reads articles and watch the trading screen. 4 PM onwards
he meets the people at the end of the trading hours. At 7.30 he leaves
for home, after reaching home he plays with his children and looks into
his daughters homework. At 9.30 he takes dinner and after 10 goes to
bed.
- Radhakishan damani
He
is a low-profile stock market veteran who invests on his own account.
His portfolio includes a string of blue-chip stocks that he has been
accumulating over the years. Notable holding is a 26 percent stake in
cigarette maker VST Industries, an affiliate of British American
Tobacco. A big chunk of his wealth also comes from hypermarket chain
D-Mart, which he set up and grew into a chain of more than 70 outlets,
mostly in western India. He has pledged $8 million to a Bangalore
institute and $1.8 million to the new Ashoka University.
Fast Fact: His close friend is fellow investor Rakesh Jhunjhunwala (ranked 51) who refers to Damani as his 'guru'.
Mr
Damani started his career as a trader in ball bearings, far from the
battlefield of bulls and bears. Following his father’s death, he shut
shop and joined his brother’s stock broking business, inherited from
their father. Just 32 and lacking knowledge of market dynamics, Mr
Damani’s only asset was his keenness to learn.
“He
was not a value investor to begin with; he began his career in the
stock market as a speculator,” says a Damani watcher. Mr Damani was
quick to realise speculation was the not the best way to grow capital.
Inspired by the legendary value investor Chandrakant Sampat, he started
playing for the long term.
Often, his strategy
was simple. When he bet on Indian Shaving Products (now Gillette), his
reasoning was, “People will shave no matter what.” It took Mr Damani
some time to gain a foothold, and several of his initial bets flopped.
But he steadfastly refused to follow the herd, and concentrated on
evolving trading strategies of his own.
Gradually,
he began getting his calls right, and within the next couple of years
he had joined the ranks of the big boys on Dalal Street. “Few players
possess the kind of patience he does. But when he is convinced about any
stock, he would buy his desired quantity in one sweep. And if he felt
that a stock had run its course, he would dump his holdings at one go,”
says an associate.
Also noted was his
promptness in cutting losses. “Unlike many other players, ego would
never get in the way of his booking losses,” says the associate. Mr
Damani himself once said, “Cutting your losses is like performing a
surgery on one arm with the other; painful, but it has to be done,
otherwise the arm may have to be amputated.”
Mr
Damani likes to keep a low profile. “He is not very articulate and does
not communicate much, but he is a great listener. He patiently hears
out everybody and never scoffs at any idea. It is a different matter
that at the end of it all, he would back his judgement and instinct,”
says the associate.
All along, Mr Damani made
some great calls both on the long and short sides of the market. Yet,
many players viewed him as a bear rather than a bull. “In India, anybody
who is skilled at short selling is frowned upon, the general perception
being that short sellers destroy value,” says a close friend of Mr
Damani.
His limited circle of friends is said
to include Dalal Street’s latest cult figure Rakesh Jhunjhunwala. Often,
the market believed they hunted as a pair. Even if one of them was
active at a counter, broking circles would say the duo was in it.
A
string of successes notwithstanding, it was the epic battle of 1992, in
which he emerged victorious, that would mark Mr Damani as a stock
market legend. It was the battle with the Big Bull, Harshad Mehta.
Reining in the Big Bull
The
flashy Harshad Mehta shot into prominence thanks to a daring rally that
lasted the better part of 1991, only to eventually fizzle out in April
1992. Mr Damani, on his part, was bullish on the market only till
February 1992. Even as the Big Bull was pumping up the shares, Mr Damani
began to go short.
He reasoned blue chips had
already run up a lot and fundamentals no longer justified the rally.
What Mr Damani had not bargained for was the seemingly limitless supply
of funds to Harshad Mehta. The market kept rising, but rather than
cutting his losses, Mr Damani rode on his conviction and doubled up his
short positions. “The market took off vertically between February to
April, and RK was trapped badly,” recalls a veteran broker. “His losses
were huge, and if the rally continued for a few more weeks, he may even
have had to shut shop.”
But then, it emerged
that Harshad had been siphoning off funds from the banking system and
using them to buy stocks. When the scam got exposed, the market went
into a tailspin. Mr Damani not only regained the lost ground, but walked
away with a tidy profit.
Harshad Mehta was to
lock horns with Mr Damani once more in 1998, but this time with fatal
consequences for the Big Bull. Harshad now focused on three stocks, BPL,
Videocon Industries and Sterlite. The prices of these shares touched
dizzy levels even as the broader market fell. It was as though Harshad’s
picks were defying gravity.
All the time, Mr
Damani was biding his time on the sidelines. A disciple of the old
school of investing, his assessment was that the stock price had run far
beyond fundamentals. At the time he thought was right, he started
building short positions.
Prices continued to
climb and he had to square off some initial positions at a loss. But
soon, signals came that the Big Bull was having trouble financing his
positions. And Mr Damani moved in for the kill. He simply doubled his
short positions, under the weight of which, the market caved in.
Panic
set in. The prices of the three chosen stocks plunged 60%. Some brokers
say exchange authorities even tried to bring together Mr Damani and
Harshad for a compromise but the talks failed. “It would be wrong to say
that RK’s call was motivated by a desire for revenge,” says a market
watcher who once worked with Mr Damani.
“It was all about the price… He would have short sold those stocks irrespective of whoever had a bullish view on them,” he says.
When
Mr Damani came to know that some small shareholders were left with
positions they could not exit, he covered up a part of short positions
by buying shares from these investors at a negotiated price. This was
not the first time he had done such a thing. In the early 90s, Mr Damani
had accumulated a pile of ACC shares.
When a
payment crisis loomed, Mr Damani responded to a request from authorities
and offloaded a part of his holding at a discount. He was among those
probed by regulators for suspected price hammering, but was eventually
given a clean chit.
Towards the fag end of
1998, the overall market sentiment began to improve. Before long, the
market was in the grip of a bull run led by technology stocks, which
would peak out in February 2000. RK continued to trade, but those close
to him say he had already begun scaling down the number and size of his
bets.
Was he preparing for a self-imposed exile
from the market beginning somewhere in 2001 for the next few years?
Friends say he was always passionate about retailing, but were there
other factors also that influenced Mr Damani to retreat from Dalal
Street?
After the stock market crash of 2001,
bear operators were once again under the regulatory scanner, the
allegation being that they had colluded to hammer stock prices. Needless
to say, Mr Damani also figured on the list of suspects. “Like any other
operator, RK made most of his money being on the long side of the
market,” says a broker who knows Mr Damani for long.
“He
had a finger on the pulse of the market and would not hesitate to sell
short if the situation called for it. Unfortunately, his short (selling)
calls attracted more attention than some of his long (buying) calls,”
he says.
Some players say that Mr Damani found
himself a bit out of depth during the technology boom of 1999-2000. He
stuck to the classic rules of trading, short selling shares that he felt
were over valued and going long on the under valued ones.
But
stocks from the sectors that he had an sound understanding of, cement,
automobile, steel, were out of favour. Technology was the buzzword at
the bourse, and irrespective of whether those companies were making
money or not, investors were falling over each other to buy into them.
And
Ketan Parekh had now taken over the as the reigning Big Bull, and
carved out a reputation for himself as a champion of new economy stocks.
Mr Damani’s old school strategies did not work well for him in this
period.
The comeback
If
anyone had not noticed, Mr Damani’s right calls on Tata Steel and State
bank of India made them aware of his return to the stock market this
year. But this time, it has been a mixed bag of hits and misses, those
close to him say. “Over the last one month, he has been as successful or
unsuccessful as other players in his league,” says a Damani watcher.
It
may be premature to judge the old fox when the markets have not shown a
clear trend. India, like other equity markets around the world, has
been volatile over the last month as a result of the crisis involving
sub-prime loans in the US. It is anybody’s guess how things will go from
here.
The market has also undergone a sea
change during Mr Damani’s absence. The number of participants, stocks
and liquidity have risen manifold. If there is greater transparency,
there is also more volatility to contend with. Admirers or critics,
everyone is impatient to know whether and how Mr Damani is going to pull
it off this time.
