Equity Investing as a full time career?

Dear all,
Some time ago I came across an interview of an investor from Mumbai whose rise has been meteoric. I’m not certain if I’m allowed to mention details of the investor. Hence, let’s address the veteran investor as Mr.S.
His success story is inspiring but the obstacles he faced are moving. Despite those impediments he never gave up. He vanquished those roadblocks and emerged victorious. The success story is an outcome of a concoction of grit, determination, dedication, integrity. The interview was conducted by Mr. Puneet Khurana from Stoic Investing. I’ve made notes of the 120 minutes interview. If I err my apologies.

The Beginning:
At the outset of the interview Mr. S declared that he didn’t complete his graduation course . He abandoned the Bachelor’s of Science course.
However, he had a keen interest in economics and statistics.
Iron and steel broking was his family business.
Post college he joined the family wholesale brokerage business.
His responsibility as a broker involved visiting the train yard and selecting defective steel units, pieces that could fetch a decent amount in the market and acting as a liaison between the buyer and the seller.
However, the yard was later shifted to a location far away from his home.
The increased distance prevented him from visiting the yard and selecting good quality steel samples.
Per him success in the brokerage business is dependent on honesty, integrity.
Ever since he left college he had developed an affinity for equity Investing.
He was an avid reader. He would collect new issue forms. New issue forms are today called Red Herring Prospectuses. He would preserve all the forms.
It was difficult for him to manage his passion for equity and the iron and steel brokerage business simultaneously.
It dawned on him that there wasn’t enough money to be made in the metal brokerage business. It helped him earn enough money to survive. But, not enough to thrive.
It was either equity or metal broking. Finally, he took the difficult decision of moving to equity full time. He was enamoured by the tremendous growth stories of ACC, HUL, etc.
This happened more than 3 decades back.

The Struggle in Equity Markets:
The veteran investor, today, has no qualms in accepting how difficult the first 20 years in equity were for him.
His decision to switch to investing full time was looked down open. The stock market was considered a speculators’ den. Disparaging remarks were often passed for the market.
But, Mr. S didn’t give up. He firmly believed that the market is always right.
His dream, his mission in life was to find multi baggers. Per him, stocks that are in the limelight, that are well discovered can seldom become megabaggers.
He is a staunch believer in the contribution of luck to a person’s success.
Between 30 years ago and today, his wealth has multiplied manifold. His quality of work has remained the same. But, what changed was his luck.
In the expert investor’s opinion, there are various factors that determine a person’s success. The important one being luck, good fortune.
Finally, fate smiled at him in the early 2000s. Not because of the dotcom boom.
But, before I get to the life defining success he achieved I’d like to share the difficulties he faced on the path to victory.

His 10 year old son wanted a bicycle. On enquiry it emerged that the cycle costed Rs. 1600.
It may seem like a small amount today but in those days he didn’t possess it.
He resolved he would gift his son a cycle. Expenses on all non essentials were reduced and finally, after 18 months of toil, enough money had been saved to acquire a bicycle.
Survival was a struggle. In the meanwhile he worked at the garment business of an acquaintance. The job didn’t pay much but it was warranted to supplement earnings.
Finally, after a year, he left the job because the equity bug wouldn’t leave him.
Despite the laborious life he never abandoned his desire to learn, to acquire knowledge. He had been a big collector of annual reports. He wanted to buy financial magazines. But, they were expensive. Hence, he would work hard to secure a magazine that was reasonably priced. He believed that newspapers and magazines are the cheapest yet the most reliable sources of information.

One day, almost 2 decades ago, he was reading a financial magazine. He was impressed by the organised retailing industry.

Captivated by the retailing sector, in 2000, he invested in shares of Pantaloons for Rs 12 apiece. The major competitor in organised retail was Shopper’s Stop. Shopper’s Stop was attracting millions in PE money.
Hence, he theorised that Pantaloons would succeed as retailing would migrate from the unorganised to the organised sector.

After repeated attempts he was able to get a meeting with Mr. Kishor Biyani whose vision was organised retail in India.
I must reiterate that Mr. S still hadn’t achieved extraordinary success. But, he was trying.

Pantaloons’ first store was at Crossroad 1.
One day, Mr S convinced his wife to visit a Pantaloons store to experience modern retail.
His wife, however, wasn’t willing to visit the store since they didn’t possess the wherewithal to shop at such stores. They had just enough money to commute via public transport to and from the store. However, he convinced her to visit the store and just have a look at the new face of Indian retail. He was trying the Peter Lynch investing philosophy.

His wife was mighty impressed by the extensive range of clothes, outfits offered. Also, the experience of shopping in an air conditioned enclosure was remarkable. He was convinced this form of retail would do well. It was only a question of when.

His patience paid off. From his investment in the year 2000 for Rs 12, the stock appreciated to Rs. 2500 in 3-4 years. A return of almost 20000% in 4 years. Truly incredible.

His next investment was in a company called SSI.
He invested a significant portion of his portfolio in SSI.
He still wasn’t financially secure. But, was patient, calm.
He had decent unrealised gains.
But, past success in investing emboldened him to try his hand at trading.
His gains in SSI were eroded by trading in a now famous fertiliser company.
He sold his entire holdings in SSI at X and the stock appreciated to 35X.
He was subsidising his loss of speculation by booking his profits in tech companies. Not a very good strategy, in hindsight.
And, he continued to speculate because there was a desperation to make big money. He still hadn’t made big money and he was exhausting his savings for day to day expenses.

In this tumultuous period he never gave up learning. He worshipped newspapers and annual reports.

In 2000, when everyone was focused on IT stocks he focused his concentration on a stock called Elecon Engineering. His investment was based on the capex cycle over the next few years. But, since hardly anyone was paying attention to stocks other than IT he got a wonderful entry price of Rs 27. Along with Elecon he invested in Dynamatic Technologies at Rs. 27. He was able to detect the trend before anyone else.
When market trend aligns with our strategy massive wealth is created.
And, he attributes it to luck if such a favourable alignment occurs.
He was way ahead of the trend. His patience was tested. But, fruits of patience were sweet.

In 4-5 years he sold his holding in Elecon at Rs.4000.

One master tip- He never looks at his cost of acquisition. It leads to anchoring to the cost price. He looks at the current price and assesses the situation. If investment thesis is valid he holds. Else exits the stock.

He chose to be a contrarian and invested in leaders in the struggling sector. When the sectoral outlook improved gains were massive.

Criteria for investment :
1)Which are the emerging sectors?
2)Which sector can have positive trend in the market?
3)Most important is the price of entry and patience.
4)Good entry price gives margin of safety.
5)Look at shareholding pattern.
6)If mutual funds, FIIs have holdings,the stock is dissected enough, it is unlikely to be a megabagger.

7)Never place target on selling price.
8)Always set review prices.
9)If review target is achieved, review stock fundamentals. If thesis is still valid hold. Else, sell.
8)Annual Report is the Holy book.
9)All persons have strengths and weaknesses.
10)Find your strengths and focus on it. Refine it.
11)Always be a student. Keep learning. The day you stop learning the downfall commences.
12)Knowledge is supreme.
13)More than what to do, what not to do is more important.
14)Be an eternal optimist.
15)Don’t give up. Have faith.
16)Finally, stay invested in equities and trust the growth story of India.

And, the investor finally did make it big.
He did very well for himself and achieved his dream of being an extraordinary success by starting from scratch.

It’s a true success story. The aforementioned investor, now in his late 50s, may not garner media attention. But, it’s a story that’s inspiring, motivating and reassuring that every person possesses the ability to succeed.

If I’ve erred in any part my genuine apologies.
Many thanks.


Thanks for your efforts in putting up a big motivating story.However I would like to draw attention to few aspects which need a cautious approach towards stocks:
1.poor corporate governance STDs in India leading to quite a few companies having a free fall eg p c jewellers, vakrangee, kwality, axis etc etc in recent past and the reasons still not clears till date.
2.I am sure the annual reports incl financial data of these companies must HV bn good
3.The legal system being v slow and provision of class action suits not being there in India encourages promoters,management to do all kind of mischiefs and get away.
4. There may be one successful investor, there may be 99 others who must have lost in this process and could not recover.
While it’s desirable to remain motivated, it’s also necessary to remain cautious as everyone may not be that lucky to get back once fallen in trap.


Dear @atul1082 Ji,
1)There will always be some companies,around the world, that will skirt the law or blatantly violate it.
The US, which is believed to have stringent corporate governance standards has had several companies that indulged in unscrupulous practices. The actions of those companies were in wanton disregard of the law. Rather they were contemptible.
Let’s not conveniently select some companies that have indulged in unscrupulous practices and paint the entire universe of stocks with the same brush.

And, when we decide to invest in stocks we have to embrace the risks associated with it. It’s entirely possible that the company we invest in is a sham. But, is there anything we can do about it?
We can diversify sufficiently to protect our portfolio?
Beyond that, there’s precious little we can do.
If a person isn’t willing to shoulder this risk then investments in equity should be avoided.

Now, coming to the supposedly risk free investments- Fixed Deposits
Over centuries there have been banks that have failed. Even the ‘too big to fail’ ones have failed.
Does that mean we stop placing faith in banking institutions?
It’d be imprudent to do so.
At some point we have to place faith, we have to trust. The entire modern economy is based on the faith that the future will be better,that businesses will grow, that life will improve.
I agree it’s wrong to have blind faith. We must introduce safeguards to protect ourselves. But, there’s only so much we can do.

Shams, manipulations and charlatans will always be there. We’ll sometimes be their victims.
But, we have to accept it and move on.

And, finally it boils down to having reasonable expectations. I don’t think I can ever be as successful as the investor whose story I shared. Not even close.
All I want from equity investments is preservation of purchasing power and some.
If I achieve that I’m a happy person.
Many thanks for sharing your thoughts. I truly appreciate it.

@shreys I have also listened to this podcast of Mr. Divyesh Shah. The Rags to Riches story. His story kind of reminds me of the life of Mr.Kedia.


Dear all, I’m not familiar with people who’ve chosen equity investing as their vocation. When I came across a person, at a social gathering, involved in investing full time I couldn’t be happier. The person is a childhood friend of a very close relative of mine. To simplify the narrative let’s address him as Mr. A.

I requested my relative to facilitate an interaction with him. Mr. A was kind enough to grant an amateur like me a hearing.
I was accompanied by my relative who was the intermediary.

We spoke at length. He was generous enough to share his experience in various fields of life. There were aspects in our conversation that, in my humble opinion, are relevant to investing.
I’ve tried my best to distill the discussion.
If I err my apologies.

About Mr. A-
Mr. A is a person in his early 50s. He, since childhood had been a decent performer at academics. He excelled in his matriculation exams. As a result of that, he was granted admission at a decent engineering college.
Thanks to his impressive graduation scores he was offered a job at a leading electronics technology company. He was 22 then - 30 years ago.

He began saving from the word go. He would invest a major portion of his income in stocks. As time passed, he matured, developed an interest in investing. He had the willingness to learn more on investing. He commenced his equity related knowledge acquisition pursuit. The pursuit began when he was 23 years of age. It’s still on. In the meanwhile he got married. While he was still learning he had been investing small amounts in the well known multinationals of those days.

He worked at the firm for 26 long years. He did well for himself- Earned well, reached a senior managerial position. All in all, he had a cushy job and a desirous life. Everything was great.

Until, one day, he realised that he was nothing but a cog in the massive corporation. He felt that his life lacked meaning. There was a lack of satisfaction, happiness. He thought that investing could provide meaning to his life.
Did it? He answered it in the later portion of our interaction.

I had always thought that materials would bring happiness. But, this conversation changed my thoughts. It changed, to a certain extent, my perspective of life.

Finally, 3 years ago, after consulting with his immediate family members he decided to tender his resignation. Initially, there was resistance from his relatives. But, he assuaged their concerns and took the plunge. Also, it’s pertinent to note, that by the time of his resignation his children were about to complete their education and become independent.

He began by saying that it was tough. There was too much time and too little work.
He would read annual reports, books on investing, reports from financial services companies. He read everything that he possibly could. He spent almost the entire day restricting his activity to his study. And, then made some more investments. Investments in addition to his previous investments. For the first 90-100 days his schedule was exhausting.

But, as usually happens, when you start with too much energy, eventually you experience burnout.
After 5 gruelling months he experienced the same problem- Lack of meaning, lack of happiness. He was confused. He was doing what he enjoyed- Full time investing. Yet, he was unhappy. Financially, he was stable. But, plagued by aimlessness.

Now, what could he have done?
He thought of giving this process 3 more months. If he didn’t feel better he would resume his job.

He tweaked his schedule a bit. Now, instead of reading books by himself, he collaborated with people who had already retired. They would meet, discuss stocks and everything under the sun that impacted stocks. The people involved were veterans in the field.

After interaction with experienced investors he would interact with those who were beginners. He would guide them, teach them.

Also, he began practicing Yoga.
He would think for hours together. Just think.
He also expanded his reading to topics as diverse as archaeology and travelling. He began reading everything. He has a tremendous collection of books.

He introduced drastic changes in his lifestyle. Cut down on all unnecessary expenses. Tried to live a frugal life. Initially, it was tough since he was used to conveniences. But, he had resolved to shed his dependence on these objects.
In brief, he began to live a minimalistic life. His expenses went down significantly.

At the conclusion of this 3 month trial period, was he happy? He asked me to hazard a guess. I responded that he must’ve been unhappy and craving the luxurious life he lived some time ago.

He told me that I was wrong. He had never been happier. He experienced true joy. Bliss that his fat paychecks could never give him.

By helping others he found meaning. By practising Yoga he found peace. By becoming a minimalist he found freedom.

The words he shared now had a lasting impression on me -
We believe we are constantly in the pursuit of money. But, we don’t want money per se. We want the power to acquire materials. When you minimise the need for materials you simplify life.
Often, luxury becomes a necessity. Once that happens, we become subservient to the job.
The more we get the more we want.
He explicitly mentions that a lifestyle devoid of materials is tough- It isn’t for all.
He tried it and he embraced it.

It’s been 4 years since he left the job. He hasn’t been happier. His investments have done reasonable well. But, it’s not of much use to him now. His needs are few. He has become benevolent. Finally, he has a reason to wake up in the morning with a smile. He ends the day with a smile. His life is simple but there’s satisfaction.

He explicitly mentioned that had he asked a financial planner before leaving his job he would’ve been discouraged to do so. But, it worked out well for him.

He concluded by saying - It’s not always about the money. Ensure that you have enough for your needs. For your luxuries you will never have enough.

He had finally found meaning and satisfaction- Though not in investing.

A truly remarkable personality. He isn’t a celebrated investor. He’s a common man with an incredibly journey of discovery.


Some gyan to get started -

The academic institution I study at conducts a symposium, every year in May, as the academic year approaches conclusion. It’s a time of teary farewells and extending warm welcomes to new students. The symposium features an interaction with an alumnus/alumna who has made remarkable achievements. Basically, it’s an exercise to boost the morale of students,inspire them. My college isn’t a name brand one. It’s a very small regional college. But, there are some students who’ve defied odds and reached the summit. One such alumnus shared an account of his rise. He faced a lot of obstacles. But, overcame them and held his head high. It’s a narrative that’s worthy of dissemination. If it helps even one person feel better the purpose is served. Since, it’d be inappropriate for me to divulge details about the person I’ll use pronouns to address the alumnus.

He( the alumnus) joined the academic institution as an 18 year old . Confused, aimless, driven by the herd. The objective was to attain a bachelor’s degree and then pursue a course in finance. He couldn’t care less about the course being taught. But, there was something he cared about immensely - Playing poker and stock trading. He possessed immense knowledge about exotic financial instruments at the tender age of 19. To his immense pleasure he came across some other students who shared his interests of poker and trading. To his myopic eye, life seemed to be getting better. He would skip classes and ended up spending a substantial portion of the day indulging himself- Playing poker and discussing trading strategies.
The disregard, contempt for academics reflected in his scores. He had failed in his second year of graduation. Astonishingly, he was delighted. He had more time at his disposal to improve his performance in poker and trading. At his parents’ behest he studied and became eligible for the 3rd year of graduation. Yet again, he failed. But this time, it was different. Once, a confident young man, he was now melancholic. He had given up on life. Or maybe, life had given up on him. He couldn’t switch to other graduation courses since he had spent a lot of time and money. It was either abandonment of the course or completion of the course. He tried looking for jobs. But, in vain. He then began contemplating suicide. Life had become devoid of colours. There was just darkness.
He could neither laugh nor cry. He was enveloped by sadness. He was at a stage where he couldn’t experience the spectrum of emotions. Nothing cheered him up. To survive, he resorted to the activities that aroused enthusiasm in him formerly- Trading and poker.
After tremendous encouragement by his parents he graduated at 24 years of age with ordinary scores. It seemed to him that he’d never emerge from this vicious cycle.

Post graduation, he resolved to pursue his dream of studying finance at a premier management college. He appeared for various preliminary examinations. He performed well. But, his dreams were shattered. He wasn’t granted admission thanks to his mediocre graduation performance. Fortunately, he had been granted admission for a finance course at another institution. Not the best but just alright. He studied well from the very beginning of the course. Graduated close to the top of his class.
From a student who failed in graduation to one who excelled in post graduation, it was a transformation that was awe inspiring. But, was it the end of his troubles?
Not yet.
Thanks to a sluggish recruiting season the jobs offered weren’t encouraging. But, he had no alternative. He worked hard, was a top performer and after a couple of years he was able to secure a position at the proprietary trading division of a leading foreign company. It paid him reasonably well. He worked at the firm for 5 years.

In the 7-8 years of service he saved diligently. Finally, he succumbed to his calling- Trading.
He quit his job. To supplement his income from trading he provides consultancy services from home. He is very comfortably placed.
From contemplating suicide at a point of life to achieving financial freedom, the journey is motivating.

I do realise that this thread is for full time investing and the account is of a full time trader. But, there are some lessons like persistence, resilience, dedication that can be learned from his life. Turbulent times threaten to destroy us. But, it’s the narratives of such heroes that help us survive.

He concluded by saying, " Breathe, Just Breathe. Each one of us is stronger than we imagine."

He doesn’t ask us to be sanguine. He asks us to just pass through the tumult. Eventually, it’ll probably get better.

Withdrawn due to requirement.


Dear @The_Confused_Consult,
Sir, I’d like to begin by expressing my heartfelt gratitude to you for sharing your thoughts.

If I may be so bold as to say that I have my doubts on the validity of the 10000 hour rule.

My humble submission- In investing and in several other disciplines, to excel, a person just needs to be better than most others. Then the question arises- How long will it take to be better than most other traders/investors? I don’t know.

The next question that arises- What’s the contribution of luck in a person’s investing performance?
Sometimes, the lack of skill, knowledge is compensated by favourable chance events.

Then, the question that came to my mind-
Does increased information, data, knowledge necessarily translate into higher returns?

Please excuse me if I’m wrong- But, I feel that quality of spending is very subjective in nature.
At the end of the day, I think that most people are in the pursuit of happiness. For some, small pleasures like books can make a person happy. While for some, even massive achievements won’t be enough to make them happy. It’s a person’s disposition that’ll probably play a crucial role in the spending habits. And, I may be totally wrong, but I feel that disposition is as heritable as any other trait.

Money, is without a doubt crucial for survival. But, the importance of money in a person’s life is again subjective. For a cynic it may mean nothing but for a hedonist it may mean everything.

Attainment of money does lead to the experience of happiness. But, is the happiness experienced an outcome of the achievement of money per se or accomplishment of the task that led to inflow of money? Yet again, I don’t know.

In my limited understanding, to develop a nuanced understanding of such complex topics will take me years. That’s precisely why I share my thoughts on this wonderful forum since collaboration will likely expedite my journey towards clarity.

@The_Confused_Consult Sir, My genuine thanks to you. My apologies if I’ve erred.

Dear @The_Confused_Consult,
Sir, this has been a truly enlightening exchange for me. It’s humbling to know how much I don’t know. It’s only when ignorance is acknowledged that the journey towards enlightenment commences.
There are some points on which I humbly disagree. But, that’s the essence of every healthy discussion.
Yet again, many thanks.

1 Like

Per your guidance, I will have to reconsider the beliefs dear to me. Anything I cannot substantiate with reason deserves deliberation and if need be, abandonment. After all, each one of us is responsible for the beliefs we hold. We propagate our beliefs through our words and actions. Your thoughts have left me an emotionally richer person.
An on that note, I’ll conclude my message. As always, many thanks.

1 Like

Dear all,
Today, I’d like to share the summary of an interview conducted 2 years ago. It was conducted by Mr. Puneet Khurana.
The interviewee is the fund manager of a top class mutual fund. The organisation is known for running a single mutual fund. The interviewee is Mr. Thakkar.
I’ve tried my best to be succinct. The following content is an extract, a summary. If I’ve missed some points worthy of mention my apologies.

The interview commences with a brief introduction of the interviewee. Mr. Thakkar shares his education background. He was born and brought up in Mumbai. He was exposed to capital markets literature since he was 7 years old. His father was a long term investor. He didn’t employ sophisticated investment strategies that are prevalent today. But, placed faith in a company’s potential to grow its business. Mr. Thakkar was lured by the markets. His family encouraged him to pursue his studies. On conclusion, he was free to choose his vocation.
He graduated in 1992. He then joined Prime Securities as a trainee. From 1994 to 1999, he worked in the merchant banking and corporate banking division. From 1999 to 2001, Mr. T worked in the fixed income division at another broking house.
In 2001, Mr. Thakkar associated with a legendary investor.
Finally, Mr. Thakkar shifted to the equity asset class.

Journey as a fund manager
As I previously mentioned, the organisation Mr. Thakkar currently works at runs just 1 mutual fund. The interviewer sought a response as to why more schemes weren’t launched and why the company doesn’t offer portfolio management services.
His response was straightforward.
Years ago, it was a hassle to launch a portfolio management services. Client on boarding was an inconvenient task. It was a prolonged process. Mutual funds, on the other hand, we’re scalable.

And, he remarked that companies launch multiple mutual fund schemes to capitalise on the booming sector and increase their assets under management.
Example- In 1999-2000, technology focused schemes were launched.
In 2005-2008, infrastructure, real estate schemes were launched.
He believes that opportunities in the market can be taken benefit of with just 1 scheme without resorting to unethical means.

Often, financial services companies launch too many schemes to take benefit of the law of averages. When too many funds are managed by a company, some are bound to outperform the index. The company will then wax eloquent about the outperformer and bury the underperformers.
believes in ethical wealth generation.
He is happy to be under scrutiny. He, along with his team is invested in the fund. His interest is aligned with the interest of his investors.

He doesn’t desire to be in the top 5 or top 10 mutual funds. He invests for the joy of investing.
He encourages investors to invest with a time horizon of at least 5 years. To prevent short term thinking, there’s an exit load of a couple percentage points, which flows into the corpus and rewards long term holders.

He is a proponent of diversifying into foreign markets,especially the USA. Almost 25% of the AUM is invested in USA. They don’t invest in niche US business. But, business that are mainstream, well discovered. Hedging is done by investing in exchange traded future contracts. It provides almost 90% protection from currency fluctuations.

Mr. Thakkar responded in an epigrammatic fashion.
He likes to invest in quality businesses at reasonable prices. He refrains from cigar butt investing. Reason being the failure of activist investing in India. Minority shareholders aren’t able to influence decisions of management in India. Whereas, in the US, investors like Carl Icahn exercise their rights as shareholders and ensure management acts in the interest of minority shareholders.
What prevents activist investing in India?
A simple answer- High promoter shareholding.
When the promoter holds 60% of the outstanding shares, it’s difficult for other shareholders to collaborate and object. But, changes are being made. The right steps are being taken.

Value unlocking takes place when the promoter desires

**Stock Selection **
There are multiple strategies Mr. Thakkar adopts for stock selection.

  1. Run stock screeners
  2. Track activities of investors he admires
  3. Read voraciously


  1. Qualitative
    a) Promoter quality
    b) Treatment of minority shareholders
    c) Past actions of top leadership

  2. Quantitative
    a) Return on Capital
    b) Low debt
    c) Decent sales growth
    Along with various other parameters in public domain

But, he mentioned that companies with aforementioned characteristics are often expensive. Hence, the right time to buy such quality businesses is during corrections. Or when the market ignores the sector.
Mr. Thakkar, in an unequivocal manner explains that it’s imprudent to buy companies at ridiculous valuations citing quality. Quality has a price but don’t overpay.

Mr. Thakkar believes that the decision to sell is tougher and more important than the decision to buy.

Sell, when the price incorporates even the most optimistic scenario.

Sell, when the thesis to buy isn’t valid anymore.

He guides that if a mistake in buying was made, exit. Even if it means booking a loss.

There’s no right or wrong approach here. To each his own.

Mr. Thakkar believes that it’d be a mistake to invest in sectors with heavy government interference. He says this from the bitter lesson he learned form his investment in oil marketing PSUs.

Also, government interference destroyed his investment thesis in Noida Toll Bridge.

Mr. Thakkar regretted his investment in a cyclical investment management company. He invested at the peak. Despite 10 years having elapsed, the price hasn’t surpassed it’s previous high.

Cyclicality, if made use of correctly, can be a massive wealth creator.

Mr. Thakkar shared some hilarious quotes which deserve to be known by a wider audience.

DCF is like the Hubble telescope. Move it 1 inch and you’re in a different galaxy

The best software for fiction is an Excel spreadsheet and not Microsoft Word.

He believes that the intrinsic value of a company isn’t a precise number. It’s a spectrum and the value could lie anywhere in between.
Trying to project intrinsic value to the decimal is a futile task.
We often tend to be delusional while projecting earnings years down the line.
Be realistic.

Mr. Thakkar believes in the following equation:
Current price = True fundamental value + Speculative value.

True fundamental value incorporates what’s on the books of the company. Also, cash flows expected over the next few years.

The art is in evaluating the speculative value.

He advises us to be conservative in our projections. It’s unwise to pay top dollar for hypothesis.

He adopts a stock specific approach. He doesn’t pay too much attention to index levels.

If opportunities are available deploy cash, else stay in cash.

He generously shares his wisdom in this interaction.
And, encourages us to be in the pursuit of knowledge. He himself is a regular reader.
If I’ve erred please excuse me.

In my initial draft, I had utilised a pseudonym. But, I’ve edited the content and mentioned the name of the veteran investor. Also, I’ve put up a disclosure mentioning the possibility of misinterpretation by me.

I’ve tried to the best of my ability to ensure that my interpretation of Mr. Thakkar’s comments is appropriate. If I’ve flawed, my apologies.
If there is any factual error by me, it’s unintentional. Yet again, apologies if I’ve erred.


Dear all,
A couple of months ago Mr. Niraj Shah conducted an interaction one of India’s preeminent full time investors - Mr. Vijay Kedia.
His story is one that’s unlike any other. Truly awe inspiring and motivating.

There were so many nuggets of wisdom in the interaction. I’m fairly certain that it’ll help me mature as an investor. I’ve tried to summarise the session. If the transcript has errors, it’s inadvertent, please excuse me.

The interview begins with a brief introduction by Mr. Shah on Mr. Kedia’s illustrious investing career.
For Mr. Kedia, investing is love, sweat, tears and joy. Many are tremendously passionate about equity investments. But, not many are able to mirror Mr. Kedia’s success.
To this, he humbly responds that he hasn’t achieved anything great. He says that he’s still a work in progress. Per him, failure is a teacher like none other.

Mr. Kedia is a firm believer of this success formula-
a) Knowledge
b) Courage
c) Patience
Mr. Shah asks if courage is the ability to survive a period of lull in the market?
Mr. Kedia responds with an emphatic yes. In the stock market, money is made in long term investments. He says that he says this from his personal experience.

A major criterion to assess investment worthiness is a clean management.
Mr. Kedia says that as a person managing his own money, he has the liberty to restrict his investments to companies with top quality management. It’s the luxury of being an investor of one’s own money.
A mutual fund manager, on the other hand, is subject to various rules and regulations which often may impede the journey of wealth creation.
For an investor, lack of pressure is a luxury.

Mr. Kedia then talks about his strategy of generating alpha. It’s a simple acronym with potential to generate wealth.
S- Small size
Now, Mr. Kedia clarifies that by small, he doesn’t necessarily mean small capitalisation. By small, he refers to the small size of the overall market share occupied by a company.
For example- A company has 200 crores sales. But, the market size is 5000 crores. This would definitely qualify the filtration process. Since, there’s ample scope for expansion of market share.
A small sized company( per the slice of the total market occupied) graduating to a larger company generates enormous wealth.
Not many large caps can deliver such returns. There definitely are some exceptions. Maruti Suzuki being a glorious example.

Mr. Niraj remarks that for small companies, return ratios won’t be appealing.
Mr. Kedia responds that he doesn’t pay too much heed to return ratios. He states that management quality, fire in the belly and potential for growth are much more important for him.

He then shares an interesting case study featuring Dettol and Savlon. Despite being similar products, Dettol has almost 6 times the market share of Savlon. This could be attributed to the fact that consumers think that Dettol works better because of the stinging sensation on application. We think that it must work better because it hurts.

On similar lines, we often think that, returns must be better when we employ complex strategies to evaluate companies, preparing overwhelming Excel models, etc.
But, Mr. Kedia disagrees.
He states that investing is simple but not easy.

He then shares other portions of the SMILE acronym.
Medium in experience
It may not be wise to invest in companies having promoters with little experience. The reason being lack of exposure to market cycles. Like stock markets, businesses also have cycles. Passing through these cycles helps a business promoter emerge stronger and with a nuanced understanding of the sector. As previously mentioned, failure is a teacher like none other.

Large aspirations
It’s the business promoter who needs to possess a desire to grow the business. Complacency should anathema to a business owner.

The next abbreviation is CHNGE.
Ch stands for Chamcha- Sycophants.
When a business promoter is surrounded by sycophants, it often leads to poor decision making and dissipation of ambitions. It leads to saturation with the success achieved.

He stands for Health. Often, promoters may have best intentions for the company. They may possess a tremendous desire to take the enterprise to an elevated position.
In growing the company from small to moderate size, businesspersons may reach the age of 50-60 years of age, when health doesn’t lend as much support. This may prove to be a roadblock to further growth.

NG stands for Next Generation
In case of the key manager growing old, it’s important for family managed businesses to plan succession. More often than not, it so happens that the next generation has no desire whatsoever to run the business. They may not be motivated enough to manage a blooming corporate. In such cases, growth may plateau.

Estands for Ego.
The foe of any sort of growth - Ego
When ego grows, anything else ceases to grow.

He politely states that it was a favourable time that gave him the opportunity to invest. He also appreciates the contribution of luck to his success.

He then observes that there are hardly any hidden gems left. Most stocks are discovered in this age of abundant information.
Mr. Shah then asks him the recipe for generating alpha.
Mr. Kedia gives a one word answer- PATIENCE
Believe in the story. Stick to the story. And, sail through.

He then, without any hesitation, acknowledges that he hasn’t been an entrepreneur as successful as he is an investor.

As an investor, not a lot of emphasis should be placed on price targets and price targets.

A jovial disposition, humility and willingness to share his vast treasure knowledge differentiate him from others.

I reiterate, I’ve tried my best to curb errors in interpretation. If any, please excuse me.


Market titan Mohnish Pabrai, in a dialogue, held not too long ago, generously disseminated his extensive knowledge on investing. His words are profound and possess the ability to improve the investing process of an investor.
I do realise that these summaries may not be directly relevant to this thread. But, I feel, that inculcating some suggestions offered by these veteran investors can definitely enhance returns. If there’s a thread where the summaries would be better suited please guide me.

Mr. Pabrai begins by remarking that buying stocks is far more complicated than most people might think.
He makes an observation that a lot of investors invest in stocks without knowing even the market capitalisation of the company. He states that it truly amazes him.

He then says that the concept of Circle of Competence precedes even something as important as stock price.
Even a market veteran like Warren Buffet considers 95% stocks beyond his circle of competence. 97-98% of the proposals on Mr. Buffett’s desk end up in the 'too hard pile.

For rest of the investors, 99% of the stocks are beyond the circle of competence, observes Mr. Pabrai.

For most investors, indexing is worth considering.
Buying stocks should be an exception, not the norm.
Auction driven markets, more often than not, undershoot and overshoot. It’s this inefficiency that creates pockets of opportunity.

Mr. Pabrai shares that for a long term investor stop losses may not be such a good idea.

Recipe for investing success
a) Stock in circle of competence
b) It should be worth a lot more than what it’s currently valued at.

If the aforementioned 2 ingredients are present, a stop loss is unnecessary.

For Mr. Pabrai, a stock has to scream undervaluation. It has to be a screaming buy.

If for valuing a company Excel models have to be accessed it’s a rejection.

If the business can’t be explained easily to a child it’s a rejection.

He emphatically states that buying a growing company is way better than buying a cheap low growth company.

It definitely is a good strategy to invest in sectors with long term tailwinds.

When to sell compounders?
We think buying is complicated. Selling is way more complicated.

If it’s a great company, great price, great management allow the company some leeway.

Golden advice on selling compounder stocks:

Don’t sell when the compounder is fully priced, don’t sell when the stock is overpriced but sell when the stock is obscenely overpriced.

Now, the adjectives are subject to each person’s interpretation. To each his own.

He then, without reluctance, confesses that he’s often sells too early.

An investor may perform detailed analyses on a company before investment. But, real and nuanced understanding of the business develops post buying.

Equity markets often do nothing for prolonged durations and then indulge in frenetic activity in a relatively short period. Patience is key to success

In all aspects of life, it’s trust that’s crucial.

He describes himself as a ’ Gentleman of Leisure.
Absorbs data, continues to learn and in the process if he finds an anomaly in pricing the business, invests.

As always, I may have erred in interpreting Mr. Pabrai’s remarks. Please excuse me for erroneous information and interpretation.


Sumeet Nagar, the managing director of Malabar Investments is an investor par excellence. He is known for his incredible understanding of the small and mid cap space. Like in all spheres of life, there’s always something to learn from others. Learning, without an iota of doubt, enables growth. I’d like to share some pointers kindly shared by Mr. Nagar which, I’m inclined to believe can help refine our investing strategies.
After the financial crisis, almost a decade ago, unprecedented liquidity boosted the economy.
It’s likely that quantitative easing could be concluding.

There’s a healthy chance that 2018 will see reduced liquidity.
There’s a straightforward relationship between liquidity and asset prices.
Increased liquidity leads to more money chasing assets. Demand goes up and hence prices appreciate.
By inversion, its obvious that a liquidity crunch leads to lower demand and hence lower prices.
However, rising earnings could cushion the fall.
Prices are a function of demand and supply.

Investing in general and investing in small and mid caps in particular should be for the long term. But, we should definitely keep an eye on short term risks.

Over 5-10 year periods, small companies typically outperform larger companies. The straightforward reason being their ability to grow faster.

During times of irrational exuberance, it may be a good strategy to reduce exposure.
During periods of immense pessimism, increase exposure.
Easier said than done.

A good, investible business is one which has the ability to compound sales over the long term. But, without needing to raise much outside capital. Growth, ideally, should be fuelled by internal accruals.

Why would competitors let the company grow sales? Wouldn’t they try their best to snatch market share

Here comes in to consideration the most around a business. There are varieties of moats. Even the ability to be the lowest cost producer is a moat. It varies from company to company.
The company should be a cash generator. And, generated cash should be utilised for growing. Its a virtuous cycle.
Also, there should be a runway for growth.

Management Team
As most veteran investors would say- For any investment thesis to fructify, of supreme importance is management quality.
a) Strong Operational Capability
Management should know the business inside out. There should be a drive for expanding the enterprise.
b) Capital Allocation Skill
c) Integrity
d) Quality Lower Level Management

Industry provides a tailwind to the business. But, it’s a good management that is able to harness it.
If sectoral tailwinds and good management are complimented by moat and hunger for growth, it could be the recipe for a blockbuster stock pick.

As always, if I’ve erred in my interpretation, it’s unintentional. My apologies if there are errors.


I have been regularly reading this thread in valuepickr -excellent contributions by all -I have recently quit my job and now full time into investing ,thanks to all members in this group for all the quantitative and qualitative insights …today i just came across a brilliant article ,please go thru if you haven’t yet -while all are covered earlier here but nice to refresh at one place


Dear all,
Today, I present the summary of a dialogue conducted by Mr. Khurana with a full time value investor. I’m not certain if it’s acceptable to disclose the investor’s details. Hence, I’ll address him as Mr. A.

Mr. A now manages money for himself and his clients. He has established himself as the source of coherent opinions on investing. His guidance is pure and does possess the potential to dramatically improve our process of investing.
The beginning of his investment journey is nothing but fascinating.

In his childhood, he witnessed his parent investing in companies, applying for stocks in initial public offerings. The process sure piqued his curiosity.
A monumental moment in his journey was the launch of a mutual fund by a major American company in 1994 . He witnessed delirium among applicants.
His desire to participate in capital markets continued to develop over the years.

Finally, in the years 1997-98, as a student of textile engineering, he made a foray in the bizarre yet enchanting world of capital markets.
He commenced with a capital of Rs. 10000.
Being a student of textile engineering, he had a reasonable understanding of the company Bombay Dyeing. It was in his circle of competence. This investment appreciated his corpus by 30%. Mr. A was delighted, exuberant.

In the meanwhile, he had established a habit of reading newspapers, magazines concerning the world of finance. However, he admits candidly, that he couldn’t comprehend a major portion of the content in these sources of information.
But, its precisely this inability to understand that stimulated him to persist. Also, on a lighter note, he shares that having reading as a hobby could prove to be entrancing to recruiters.

He graduated in the year 2000. Prior to graduation, in the run up to the IT boom, unprecedented recruiting activities were initiated by IT firms. As a result of that, he was offered a job by one of India’s leading information technology firms. But, in those days, he wasn’t very comfortable with technology.

Mr. A was pleased to get a job. But, there was a tinge of unhappiness since it wasn’t his calling. However, not to his displeasure, the IT bubble burst and the job offer was rescinded.

Post graduation, he was granted admission to a leading management institute in 2002. Mr. A was simultaneously investing in shares. He then went on to work with a leading professor as well as investor.

Investing Strategy
In the initial days, scanning BSE announcements, was a major source of investment ideas. He practised various investing styles and strategies- Deep value investing, cyclical investing, debt restructuring investing, etc.

Just 10 years ago, his portfolio comprised of 40-50 companies. Over the years, amends have been made and now, Mr. A’s portfolio now comprises 7-8 companies. A major source of investment ideas is screens, interactions with fellow investors, literature.

His recipe for investing success is good business, good management and a realistic expectation from investments
Mr. A desires a 17% IRR.

Selling decision
Mr. A lightens his holdings when market prices overshoot the intrinsic value. Booking profits is contingent on company quality and alternate opportunities. His selling decision isn’t dependent at all on the index levels. He takes a company specific view.

Determination of intrinsic value
He employs a discounted cash flow model after introducing very conservative numbers to estimate the fair value range. For further safety he takes a 25% margin of safety. He assumes a 10% discount rate.

Mr. A places great importance in the moat possessed by a business.

He considers selling when market price is 1.75-2 times the calculated intrinsic value
He initiates a fresh assessment, evaluation of the company once valuations exceed intrinsic value and become lofty. But, if investment thesis is wrong, have no hesitation in booking losses.

But, for Mr. A, it must be mentioned that valuation is just 20% of the investing process. 80% is contingent on business quality and management.

Business thesis is important but valuation is more important

How long to hold stocks?
Mr. A believes in having no timelines. He allows the market to take its own time to discover the
stock and accord fair valuations.
More often than not, if evaluation is correctly performed, returns will be delivered. Market may delay reward but not deny it.
Spend a lot of time before investing. But, once invested, be patient

Risk management strategies
Risk is the loss of capital and/or purchasing power.
Mr. A believes in developing a tremendous grasp of the business before investing. Also, diversification is crucial for him. He doesn’t invest more than 20% of portfolio in any stock at cost.

In depth understanding + Diversification = Risk Management

Are triggers required for stock to appreciate in price?
For investing styles like asset plays, triggers are requisite. But, when an investment is based on the mispricing of a excellent earnings generating company, business performance in itself will trigger price appreciation. But, patience is critical.

No investor is immune to mistakes.
Mr. A succinctly summarises his mistakes-

Investing in ideas with half baked conviction

Resist the Fear of Missing Out.

Calm mind is a prerequisite in investing

Derive nectar out of the investing process

Don’t aim after shooting. Understand and only then act

Is meeting management advisable?
Mr. A believes that management meets are unwarranted. Often, they may prove to be counterproductive. We may be entranced by the top manager and investing based on such superficial evaluation is often disastrous.
All the requisite information is available in public domain.
It isn’t value additive to meet top leadership. It often leads to wastage of time.

Try to understand the business, not management

Suggestions for overall development
To be a successful investor, it’s imperative to participate in non investing activities.
Excess of anything is detrimental.

Mr. A is an avid sportsperson. He reads extensively, interacts with friends and also spends time in other leisure activities.

Some leisure is absolutely necessary for high productivity

I’ve tried my best to restrict errors. If any, my apologies.


Very interesting. I have the a lot of the same philosophies this mysterious investor does.

Things I also do:

  1. Focused portfolio (I am currently invested in just 5 stocks. Out of that, 3 stocks make up 75% of my portfolio).
  2. I expect only a 15% CAGR throughout my investing career.
  3. I use a DCF to arrive at intrinsic values for stocks.
  4. I’m in no hurry to sell. I sell only if the price is at least 1.75x-2x my calculated intrinsic value, my story for arriving at the value changes or I find some better investments (Or in the process of tracking some).
  5. I rarely track my portfolio on a daily basis. I check in on it maybe once a week. I intend to stay invested in the companies I hold for a long time.
  6. I hardly give into FOMO. I’m dead calm most of the time.

Things I don’t do:

  1. I tend to give more weight to Valuation and Financial Analysis. Numbers don’t lie.
  2. My largest holding is almost 40% of my portfolio. But I agree with the fact that Risk is a protection against the unknown (WB’s “Risk comes from not knowing what you’re doing”). Nobody should invest 40% in something they don’t know.
  3. I don’t believe participating in non investing activities has anything to do with being successful at it. Or maybe I’m understanding this wrong. I read a lot of books and articles, but I believe that they indirectly contribute to my investing skills.

Pardon me if I sound too appreciative of myself, but this really surprises me. I would love to meet this person. I’ll get him a beer to boot.


Thanks for your views - interesting…Is it okay for you to disclose the holdings?

Here goes: