Sometimes a stock’s story is too overwhelming to ignore; you just go and pick it up. Later one can sit and investigate the merits, says ace investor Rakesh Jhunjhunwala. He cites buying Lupin and Dewan Housing with such mindset —he calls is invest now, investigate later mindset, and likens it to dating Aishwariya Rai, silver screen’s most compelling face.
Below is an interesting peice of conversation between three market masters–Junjhunwala, Ramesh Damani and N Jayakumar discussing the importance of education as well as investment strategies.
Jayakumar: It is kind of appropriate in today’s forum that we talk about education. You have had to an extent what you would consider education enough to make you sort of take on the world, a street fighter. People have run out of adjectives but do you have any regrets that you could have studied a lot more and become a lot less successful as a corollary?
Jhunjhunwala: I have no regrets in life about anything except my habits. So I don’t regret and I don’t think that education is what makes you — street fighters are born, they are not made because it comes from determination and guts. I don’t think the determination and guts come with education. Education gives me the ability to understand, education gives me the ability to be civil and I think — I did chartered accountancy and I think it is one of the best education anybody could have. It is not a very glamorous education but it is a brass-tacks education and it made me understand financial matters, it also gives me the understanding of law, which is very necessary. To interpreting the Budget, you need to understand the law; what the Finance Bill means? So I think I had that education which gave me the right cutting edge in terms of understanding and of course I am a street fighter.
I do not know whether it came with my education. Research shows that formalized education takes away entrepreneurship because you reason and you analyze.
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Damani: One of the things that you are famous for on the street, you have many colorful sayings, is ‘invest before you investigate’. The fact is that if you find something, go buy it and then do all the research. Is that still a driving force of how you look at markets?
Jhunjhunwala: Sometimes market gives such compelling opportunity like Dewan Housing. It had Rs 230 book value, 6 percent yield, 4 times earnings, growing at 20 percent for the last ten years, available at Rs 105 – I gave an order for 5 million shares, we will think about it later — such ridiculous valuations!!! I bought Lupin because I knew one thing that Ranbaxy had earned Rs 250 crore in a single product. Lupin had only injectable Cephalospor in approved FDA plant in Asia. They were the single filer for a product having a size of USD 360 million and the marektcap was Rs 200 crore. What is there to think? So those kind of situations are like invest now, investigate later.
Damani: Does the market then tell you also to back up the truck in these situations. Jhunjhunwala: Yes and then you research later. I bought my first five million shares of DHFL and after I bought the next whatever shares I bought, I did a lot of further research. Today it is like meeting Aishwarya Rai, what are you thinking!! You date her without thinking.