Packing A Punch - Dilip Piramal & Family VIP & WINDSOR MACHINES Worth: Rs 334 cr

VIP

Headquarters: Mumbai
Market Cap: $ 24.062 million
Revenue: $ 116.363 million
Earnings: $ 4.334 million


Second behind to Samsonite as the world's largest manufacturer of luggage, VIP Industries is India's biggest name in suitcases. Its brands include VIP, Alfa, Footloose, and Buddy. It also has distribution rights in India for Delsey products.

Dilip Piramal & Family
VIP & WINDSOR MACHINES Worth: Rs 334 cr

When ace investor Rakesh Jhunjhunwala picks up stake in a company, you are likely to seriously consider investing in it and, more often than not, you will hit the bull’s eye. Of late, the stock of VIP Industries has been making headlines for the interest shown by investors such as Jhunjhunwala and Ramesh Damani. Last month, Jhunjhunwala added 1.34 per cent stake to take his total holding in VIP Industries to about 6 per cent. “They saw potential in our company and invested, and are extremely happy today,” says Dilip Piramal, chairman of VIP Industries, whose stock price jumped 10-fold over the past 16 months — from Rs 33.80 on 31 March 2009 to Rs 365.30 on 12 July 2010. During the same period, Piramal’s personal wealth also swelled from Rs 41 crore to Rs 450 crore.


 

Piramal says this stellar growth is the result of a strategy shift last year. “We had increased prices of our mass premium product (VIP brand); the strategy didn’t work. In fact the competition ate into our market share. Last year we repositioned our brands, which gave us very good results,” he says.

The results were tangible. VIP overtook Samsonite’s American Tourister last year in the mid-segment market. The company’s revenues and profits also improved. It reported a net profit of Rs 50 crore in FY2009-10 against Rs 9 crore in the previous year, and revenues of Rs 636 crore against Rs 525 crore. “In any given year, if the sales go up by 15 per cent with the overheads remaining the same, the net margin can increase by 30-45 per cent,” says Piramal, who credits the company’s growth to his daughter Radhika, who took over as managing director on 1 May 2010. “Long-term planning, adapting to situations and the ability to carry managers along with her have been her strong points,” says Piramal, a music buff who is now busy selecting 100 songs for Saregama for a collection of CDs to be launched this Diwali.


By this year-end, VIP plans to become debt-free. Last year, it brought down debt from Rs 135 crore to Rs 85 crore and in the first quarter of FY2011, it further reduced it to Rs 35 crore. The company earns 90 per cent of its revenues from the domestic market, with the major chunk coming from the mass segment. It has 350 exclusive retail outlets, of which 125 are company-owned. “Our approach has been mostly through the franchise model. But if dealers aren’t willing to open franchises in certain regions, we open our own stores,” says Piramal.


Despite buying premium luggage maker Carlton of the UK six years ago, VIP had not launched the brand in India as it was offering Delsey at the top-end. “The premium segment being quite small, we felt it did not make sense to have two brands,” says Piramal. “But with the termination of the contract with Delsey, we plan to introduce Carlton in India.”


Piramal hints at getting into other lines of business, but doesn’t give details. However, the market seems to have already sensed it. No wonder the stock is still attractive despite trading at a PE (price-to-earnings) multiple of 21 times on a one-year trailing basis. Jhunjhunwala seems to have got this one right, too.

(This story was published in Businessworld Issue Dated 26-07-2010)

The Oracles Of Dalal Street

Rakesh Jhunjhunwala‘s tips on investment techniques

ASSET ALLOCATION & COMPOUNDING

The primary factor that Rakesh Jhunjhunwala emphasis is that one should bear in mind the importance of ASSET ALLOCATION and the power of COMPOUNDING.  

Rakesh Jhunjhunwala says that Asset Allocation means that you must be clear in your mind how much money you can spare for your equity investments.

Rakesh Jhunjhunwala emphasizes that the necessity for asset allocations stems from two realities of equities that every investor must be conscious of:

(i) Equity investments are very risky as compared to other asset classes in the short to medium term;

(ii) Equity investments take a long time to deliver results.

Rakesh Jhunjhunwala says that as an investor, you must ensure that the money that you invest in equities are not coming out of the moneys that you have kept aside for necessities and emergenicies.

Rakesh Jhunjhunwala says that you must ensure that a sufficient amount of money is always kept handy and out of the stock market (in debt investments) for meeting expenses on medical care, education, marriage and other unavoidable necessities.

Rakesh Jhunjhunwala says that it only the money remaining after this ASSET ALLOCATION that you must invest in shares.  

Rakesh Jhunjhunwala says that you must also bear in mind your age, your income-earning capacity and your risk-taking ability – also dependent on the number of dependents that you have and their short / medium-term requirements.

Rakesh Jhunjhunwala‘s point about compounding follows logically from the first point. If you are comfortable with letting the money rest in equities for a medium / short period of time, the magic of compounding works by itself.

In one of his presentations, Rakesh Jhunjhunwala showed this table of the magic of compounding.

Rakesh Jhunjhunwala's astonishing compounding example

What this astonishing presentation of Rakesh Jhunjhunwala shows is how if money is allowed to quietly compound, it attains enormous proportions. See how a paltry sum of Rs. 1 lakh per annum over a period of 25 years at a rate of return of 25% becomes an incredible Rs. 2.64 crores.

Imagine if you could save 10 lakhs every year, in 25 years you would have 26 crores, says Rakesh Jhunjhunwala!!

That is the simple but incredible clarity of thinking that Rakesh Jhunjhunwala‘s mind has.

CONVICTION

Rakesh Jhunjhunwala‘s second mantra is that you must have CONVICTION in what you are doing. You must feel it deep in your bones that equities are the way for you. You must be comfortable with the idea that your investments are subject to the vagaries of the market and you must not get sleepless night worrying about your investments.

If you think about it, this mantra is a logical corollary to Rakesh Jhunjhunwala‘s first mantra about Asset Allocation. Your comfort level with equities is directly proportional to the correctness of your asset allocation. If you have correctly kept away from equities the moneys that you need for emergencies and necessities and have only invested long-term funds in the sstock market, you will have no tension only says Rakesh Jhunjhunwala!!

DON’T BE RIGID

Rakesh Jhunjhunwala‘s third mantra is that you must be open to accepting that you have made mistakes. Don’t be rigid or obstinate. Keep an open mind!

Rakesh Jhunjhunwala  says that before buying a share, make sure that you have done proper research and identified all the positives and negatives of the shares.

Rakesh Jhunjhunwala  says that you must not get carried away by the positives of the share. Don’t get carried away by your own logic. What are the risk factors? What are the drawbacks? You must consciously ask yourself this question says Rakesh Jhunjhunwala.

If you have the CONVICTION that you are right about the share, only then go ahead and buy it.

Rakesh Jhunjhunwala says that if you bought a share that turns out to be a dud, accept that reality and do not compound the mistake by hanging on to the dud.

SAFETY OF CAPITAL & ABSOLUTE RETURNS

Rakesh Jhunjhunwala‘s next mantra also follows in logical progression to his other mantras. Take care of your capital! Don’t risk it foolishly! If you have no capital left, where is the question of returns and where is the question of compounding asks Rakesh Jhunjhunwala!

Rakesh Jhunjhunwala‘s tips on HOW TO CHOOSE AN INVESTMENT

Okay, now we come to the most important segment – How to choose an investment?

Rakesh Jhunjhunwala is a genius because it is only a genius who is able to present a successful investment strategy in an easy-to-understand format and most willing to share the formula with his less-fortunate brethren!

Rakesh Jhunjhunwala is like Warren Buffet and Benjamin Graham in emphasizing that we are not buying just a little thing that bounces about 2% every day on the stock market – but we are buying a part of a real business. He urges us to think like an owner of a business would. If you were really buying a business, what is the extent of research you would have done and care taken. Rakesh Jhunjhunwala‘s tips on what we should look for whilst buying a share is a clear indicator that he wants us to think that we are buying a part of a business.

Rakesh Jhunjhunwala says that we must look for the following in any business we are looking to own.

(i) Attractive, addressable external opportunity;

(ii) Sustainable competitive advantage – the "moat" that Warren Buffet always refers to as his investment technique;

(iii) Scalability + operating leverage. How far can the business go – in volume terms and in geographical terms;

(iv) Management quality + integrity. You don’t want to be partners with unscrupulous fellows, do you;

(v) EVA positive over investment horizon. Yes, a short-term aberration in the profitability is acceptable but the idea must turn positive over your investment horizon;

(vi) Valuation: Price –Value divergence. Ultimately, everything boils down to this. What is the value of the Company? And what are you paying for it? Obviously, the more the value and the less the price is the best case scenario.

Rakesh Jhunjhunwala‘s 10 commandments for investors (tips on how YOU can be a great investor):

Rakesh Jhunjhunwala is not a legend for nothing. Not content with telling us what techniques we should adopt whilst picking our portfolio, he also tells us what mental attitude we should cultivate to be a successful investor.

(i) Be an optimist! The necessary quality for investing success;

(ii) Expect a realistic return. Balance fear and greed.

(iii) Invest on broad parameters and the larger picture. Make it an act of wisdom, not intelligence.

(iv) Caveat emptor. Never forget this four-letter word -R-I-S-K.

(v) Be disciplined. Have a game plan.

(vi) Be flexible. For Investing is always in the realms of possibilities.

(vii) Contrarian investing. Not a rule, not ruled out.

(viii) Its important what you buy. It’s more important at what price you buy.

(ix) Have conviction. Be patient. Your patience may be tested, but your conviction will be rewarded.

(x) Make exit an independent decision, not driven by profit or loss.

Each of the said 10 commandments deserves to be etched in stone and read and re-read everyday by anyone who aspires to reach the heights of Rakesh Jhunjhunwala!!

Rakesh Jhunjhunwala‘s tip on when to sell and AN INVESTMENT

Rakesh Jhunjhunwala enhasizes that not only should you know when to buy but you should also know when to sell. As Rakesh Jhunjhunwala says in one of his commandment, learn to balance greed with fear and have reasonable expectations.

(i) Asset Allocation: It is interesting that Rakesh Jhunjhunwala never tires of emphasizing the need for proper asset allocation. If your asset allocation has gone haywire, don’t hesitate to sell to bring it back on track;

(ii) Review of Critical Factors: when you make an investment, you have hopefully paid attenbtion to the factors that Rakesh Jhunjhunwala emphasized that you should bear in mind. Keep reviewing these factors, emphasizes Rakesh Jhunjhunwala. If any of them changes adversely, sell;

(iii) Relative Opportunity: Again, trust Rakesh Jhunjhunwala to state the obvious but which all of us overlook. Keep your eyes peeled for better investment opportunities cautions Rakesh Jhunjhunwala. Is Gold a better investment opportunity? If you have that conviction, re-balance your asset allocations;

(iv) EPS or EPS Expectation Peaks: If the EPS has reached levels that can’t be matched in the near future, that’s a sign that you should exit says Rakesh Jhunjhunwala;

(v) PE Absurdity: Keep an eye on irrational behavior from other market participants. If you see a bubble building, get out before it bursts says Rakesh Jhunjhunwala;

(vi) Not Driven by Profit/Loss -Independent. This is a profound statement by Rakesh Jhunjhunwala. Don’t behave like an emotional creature and be averse to loss or get excited by profits. Keep a cool head and evaluate all decisons on an independent platform, cautions Rakesh Jhunjhunwala. Don’t refuse to sell because you don’t want to book losses and don’t rush to sell only because you have made profits. Decide independently, on the merits of the investment and whether it has any more steam left or not.

Rakesh Jhunjhunwala’s tips on how to find multibagger stocks

Rakesh Jhunjhunwala is the Mother Theresa  of the investment world because not only is this Living Legend eager to share his investment techniques with us, he is also happy to let us in on the most well guarded investment secret on how he made his billions .

But, Rakesh Jhunjhunwala, the wise sage that he is, is a man of few words. Rakesh Jhunjhunwala is reticent. When Rakesh Jhunjhunwala speaks, it is because he has something to say and not because he has to say something! So we scoured through hundreds of transcripts to decode Rakesh Jhunjhunwala‘s investment secrets. Now, we are proud to present our own version of Rakesh Jhunjhunwala‘s tips on how to find multibaggers.

Rakesh Jhunjhunwala‘s Tip No. 1: Don’t Look For Multi-baggers

Rakesh Jhunjhunwala‘s first investment mantra on how to find multibaggers is surprisingly different from what you would expect. Rakesh Jhunjhunwala says: "Don’t look for multibaggers. Don’t seek them at all. Let the multibaggers come to you!"

What is Rakesh Jhunjhunwala saying?

What Rakesh Jhunjhunwala is saying is: Don’t go out into the investment world saying "I only want to invest in potential multibaggers". Instead, Rakesh Jhunjhunwala, the Investment Guru,  says "Go back to the old-fashioned way of making investments designed by investment maestros Benjamin Graham, Peter Lynch and Warren Buffet". "If your homework is right and you have invested in fundamentally sound companies with good growth prospects, your investments will by themselves become multibaggers with the passage of time".

Sounds simple but Rakesh Jhunjhunwala is not content with giving abstract or theoretical advice because this great investment legend already knows that his disciples are a bunch of doubting Thomas and even his words of undeniable gospel will be met with stoic skepticism.

So, Rakesh Jhunjhunwala gives examples of what he means.

Rakesh Jhunjhunwala gives the example of BEML which several years ago was quoting at a pittance because it was regarded as a slothful government enterprise. No investor in his right mind wanted the shares of BEML at that time. But while other investors saw a sluggish government corporation, Rakesh Jhunjhunwala saw efficient management, a great product line-up and effeicient cash-flows. The result: Rakesh Jhunjhunwala got a bountiful; he got his multibagger.

One example is not enough to convince the cynical masses. So, Rakesh Jhunjhunwala gives another example – that of Bharat Electronics – which also was regarded as a Babu-wala company by other investors who couldn’t see what Rakesh Jhunjhunwala‘s discerning eye could. Another humble company turned into a multibagger by sheer passage of time!

Now you are convinced. But Rakesh Jhunjhunwala does not rest. He goes for the jugular. Now, Rakesh Jhunjhunwala gives a counter example.

What would an investor "looking" for a multibagger have bought in the heady days of 2000? The naive investor would have looked around and seen "spectacular" companies like Himachal Futuristic, Global Tele, Pentasoft soaring on the stock exchange, making new highs every day. So, the foolish investor would have tanked up on these shares thinking that these shares were his best bet to net a multi-bagger.

The result: You don’t need the great Rakesh Jhunjhunwala to spell that out for you.

So, now you know why Rakesh Jhunjhunwala says: "Don’t look for multibaggers!"

Yes, the point sinks in and you have understood but then you rub your eyes incredulously and ask "But what do I look for in a share?"

Rakesh Jhunjhunwala is not regarded as the greatest investor in India for nothing. He has a well-considered answer for that as well. And if you think about it, Rakesh Jhunjhuwala’s answer is made up of pure common sense.
 

'Rakesh Jhunjhunwala‘s Tip No. 2: Don’t Look for Profits; Look For Sources Of Profits

Rakesh Jhunjhunwala cautions that most investors obsess about the current sales and profits. They look at each quarter and focus obsessively on short-term profits. "That’s missing the wood for the trees" says Rakesh Jhunjhunwala.

Instead Rakesh Jhunjhunwala says "Look at the sources of Profits. What are the reasons that will give rise to Profits in the medium and long-term term".

Rakesh Jhunjhunwala drives home the point. "Look at the factors and circumstances that will create an opportunity for business in the sector".

Rakesh Jhunjhunwala gives the classic example of Infosys and Wipro. While the average Joe would have sat with his calculator analyzing Infosys’s & Wipro’s PE, ROE and nonsense like that, an astute investor in the 1990s would have realized that an internet revolution was coming in the next couple of years. He would have also realized that the off-shore business segment was booming and he would have tanked up on those shares.

Rakesh Jhunjhunwala gives another spectacular example: That of Praj Industries, a company engaged in manufacture of bio-ethanol fuel. When Praj Industries started out, nobody realized the massive demand that would arise for alternate fuels like ethanol. An investor would could have foreseen that would have had his multibagger. 
 

Rakesh Jhunjhunwala‘s Tip No. 3: Forget ‘Large Cap, Small Cap’ Nonsense – Look For Scalability Of Operations:

Rakesh Jhunjhunwala makes two very important points. First, the investing maestro expresses his contempt for the obsession that many analysts and investors have for the debate on whether large cap, mid cap or small cap stocks are better. "Forget all that and Look for Value" he thunders. "If there is value in Large Cap, buy it. If there is value in Small Cap, buy it. But don’t obsess on irrelevant matters", says Rakesh Jhunjhunwala, the one with infinite wisdom.

But Rakesh Jhunjhunwala makes his preference quite clear. He says that given a choice and all things remaining equal, a mid-cap or a small-cap is a preferred bet because the valuations will be low and they can scale it up quite quickly.
 

Rakesh Jhunjhunwala‘s Tip No. 4: Give it Time, Be Patient:

Rakesh Jhunjhunwala reiterates what the maha investment gurus like Benjamin Graham and Warren Buffet have been advising over the past several decades. Warren Buffet was plain in his advice "Our favourite holding period is Forever". Rakesh Jhunjhunwala gives the same advice: "Give your investments time to mature. Be Patient for the World to discover your gems". Rakesh Jhunjhunwala cites the examples of Crisil, Titan and Pantaloon Retail which he has held on for several years now and has absolutely no intention of divesting them any time soon.

When Rakesh Jhunjhunwala bought Lupin it was just another mid-cap pharma company starting out into the world of generic drugs. What Rakesh Jhunjhunwala saw was a good efficient management which knew its job, a debt-free status, a good product line up and a growing market. That’s all. Rakesh Jhunjhunwala bought and played the waiting game. When the market matured, Rakesh Jhunjhunwala raked in his billions.

Rakesh Jhunjhunwala also fondly talks about his investment in Karur Vysya Bank which he has held onto even after about 20 years since he bought them. He says that his paltry investment of Rs 2,000 is worth several crores today thanks to the patience and conviction that he showed.

Rakesh Jhunjhunwala is never tired of emphasizing that first you must always remember that you are buying a business and not just a little thing that bounces 2% around every now and then. When you buy that business, it must be of a very high quality, one that is capable of growing over time. Having done your hard work, you must wait for the market to do its work and reward you, says Rakesh Jhunjhunwala.
 

Rakesh Jhunjhunwala‘s Tip No. 5: Don’t get carried away by short-term aberrations:

Rakesh Jhunjhunwala cannot stop criticizing investors who are obsessed with short-term trends. Rakesh Jhunjhunwala emphasizes that he does not worry about quarterly results. If the results are bad in one quarter, he does not get perturbed. What Rakesh Jhunjhunwala is looking for is: Is there a trend? Are the quarterly results showing a trend and suggesting something or are they a mere aberration?

Rakesh Jhunjhunwala also cautions that one should not get carried away by short-term trends. He cites the oft-repeated example of 1999 when investors bought truck loads of Himachal Futuristic, Global Tele, Pentasoft while he used to buy Shipping Corporation and Bharat Electronics because he saw long-term value in them. The Oracle of Mumbai says “Never get carried away by aberrations, recognize and respect them but do remember that the market corrects its aberration though it takes time.”

Rakesh Jhunjhunwala then adds that if the market behaves irrational and punishes a stock for short-term aberration, that’s the time for you to jump in. Rakesh Jhunjhunwala cites the classic example of Titan Watches to buttress his theory. Rakesh Jhunjhunwala says that Titan suffered in a moment of crisis when it went into Europe and lost a lot of money. Rakesh Jhunjhunwala says he wasn’t perturbed because he knew that what is most important for Titan is India’s prosperity. Rakesh Jhunjhunwala envisaged the future and knew sub-consciously that Indians were going to buy far many watches and that the underlying business should be great. So, says Rakesh Jhunjhunwala, in a moment of crisis you can get great valuations and if you can envisage the future where the product could have great demand and great growth, you should use the opportunity to buy.
 

Rakesh Jhunjhunwala‘s Tip No. 6: Invest in a business that you can understand:

If you look at it hard enough, you will realize that Rakesh Jhunjhunwala‘s reluctance to buy Himachal Futuristic, Global Tele and Pentasoft even in their heydays and his preference to stick to Shipping Corporation, Bharat Electronics and the other tried and tested names reveals another great investment tip from the Prince of Dalal Street: Buy what you know. Do you understand the business enough to be able to know what will happen 10 or 20 years from today. With Shipping Corporation, you can because shipping of goods will continue to happen for our foreseeable future. But you can’t tell that with technology companies which may have a great product today but which may become obsolete in 5 years.
 

Rakesh Jhunjhunwala‘s Tip No. 7: Don’t worry about the macro stuff like fiscal deficit, inflation etc which are unknowable. Focus on what is knowable:

Another immensely practical tip from Rakesh Jhunjhunwala, India’s greatest investor, for us folk who keep obsessing about currency fluctuation rates, inflation, fiscal deficit, political turmoil is: “Don’t worry about things that you neither know about nor can do anything about. It’s not important. Instead focus your energies on what you can and should know well enough – the business of the company you are investing in“.
 

Rakesh Jhunjhunwala‘s Tip No. 8 : Don’t Try To Time The Market:

Rakesh Jhunjhunwala endorses the validity of investment advice that has been propounded time and again by the wizards of investment time and again. Never try to time the market because you can never find the bottom of the market. Instead if you are getting the stock cheap in terms of its intrinsic value and future prospects, buy it.

Here, one cannot resist referring to similar advice that Warren Buffet, the Emperor of Wall Street, gives. Warren Buffet points out that Coca-Cola made an IPO in 1919 when it issued shares at $ 40 each. A year later, the share was quoting at $19. You might think that’s a disaster because the share had lost 50% of its value in just one year. After that there was sugar rationing and the farmers were rebellious. Years later, the Great Depression and World War II happened, there were thermonuclear weapons and what not. He says you could always find a reason on why that was not the right to buy shares of Coca Cola. But if you had gone ahead and bought that one share for $40 and reinvested the dividends, your investment in Coca-Cola would be worth $5 Million today.

Rakesh Jhunjhunwala echoes the words of the Oracle of Omaha when he says that you must get right is the business. If you get that right, everything else falls into place. 
 

Rakesh Jhunjhunwala‘s Tip No. 9 : If it’s cheap, buy it- Don’t pass up something cheap today in the hope that it will get cheaper tomorrow:

Rakesh Jhunjhunwala says: If you see the opportunity today, GRAB IT! Many wonderful opportunities are lost to procrastination and then you rue your missed opportunities. Rakesh Jhunjhunwala says that it is not only important to identify the opportunity but then to be decisive and to act on it. Rakesh Jhunjhunwala cautions against getting stuck in a trap where you are perpetually seeking extra information to validate your idea.

In this, Rakesh Jhunjhunwala echoes the wisdom of Warren Buffet, the Oracle of Obama, who in the depths of the great stock-market depression of 2008 inspired investors by his clarion call "If you wait for robins, summer will be gone".  
 

Rakesh Jhunjhunwala‘s Tip No. 10 : Don’t buy stocks that have a fixed return:

Rakesh Jhunjhunwala‘s next tip seems to be a no-brainer but it is surprising how many investors overlook it. What is the point of buying shares in a company such as an electricity company where the return on investment cannot by law exceed a certain amount, asks Rakesh Jhunjhunwala. But, Rakesh Jhunjhunwala, emphasizes that this logic does not mean that electricity and utility companies should not form part of your portfolio because they offer an excellent defense mechanism to the vagaries of the stock market with the undemanding demand for their product and their predictable cash flows.
 

Rakesh Jhunjhunwala‘s Tip No. 11: Ride your winners!!

The one question on everybody’s mind is "When do I sell my multibagger?" Rakesh Jhunjhunwala answers with aplomb "Never".

One must be careful to understand what Rakesh Jhunjhunwala is saying here. What the Greatest Investor in India is saying is: "Don’t sell for the sake of selling because you can never say that the 10-bagger today will not become a 20-bagger tomorrow".

But, Rakesh Jhunjhunwala hastens to clarify that this does not mean that one will never sell a multibagger. He gives two situations when even he may sell his beloved multibagger. The first is when he is short of funds and he needs capital to invest in a stock that will give even better returns than what the existing one will give. And second, when the stock market has become so irrational that the perception of earnings and the P/E is unsustainable. Rakesh Jhunjhunwala gives the example of what happend in 2000 when euphoric investors laid bets that Infosys’ earnings would double every year for the next 10 years. Infosys’ P/E at the then current earnings was 100-150 times. So, says Rakesh Jhunjhunwala, when the expectation of earnings peaks and the P/E is unsustainable, that is the time to sell.
 

Rakesh Jhunjhunwala‘s Tip No. 12: Concentrate, concentrate & concentrate!!

There is a perpetual battle amongst investors on whether a diversified portfolio approach is better or a concentrated portfolio is better. (See Benefits of a concentrated portfolio).

Rakesh Jhunjhunwala is an unabashed proponent of the concentrated portfolio theory. But Rakesh Jhunjhunwala‘s theory must be carefully understood before being implemented in practice as it can otherwise lead to disaster.

Rakesh Jhunjhunwala emphasizes that one must venture into a concentrated portfolio only after one is sure that he has identified a share that will deliver superior returns to all the other chosen shares. The conviction must be extremely strong, says Rakesh Jhunjhunwala.

Rakesh Jhunjhunwala is not one to take risks lightly so must also be wary of the risks of a concentrated portfolio. In the recent past, we have seen so many excellent companies lose large portions of their market cap almost overnight. Some examples can be BP which was touted as the best buy in the oil space but which owing to the oil spill in the Gulf of Mexico is today regarded as a pariah. Other examples are RNRL which not only lost the battle in the Supreme Court with Reliance but then announced a disastrous merger with RPower which short-changes RNRL’s investors. Aban Offshore is another example which lost its’ Oil Rig Aban-Prince in the high seas and saw its market price plummet 25%. Yet another example is that of Satyam whose founder Ramalingam Raju was felicitated as the "Most Promising Businessman" by Earnst & Young. He later confessed that all profits shown in Satyam were bogus and that he and Maytas Infra had played a big fraud on the hapless investors.

So, while there are benefits to a concentrated portfolio, one must not be oblivious to its risks, cautions Rakesh Jhunjhunwala.

Rakesh Jhunjhunwala Portfolio - Latest - May 2010

NOT VERIFIED
 

Name Of Company	No. of Shares
GEOJIT BNP PARIBAS FINANCIAL SERVICES LIMITED	18,000,000
PRAJ INDUSTRIES LTD	11,678,624
HINDUSTAN OIL EXPLORATION CO. LTD	5,385,143
VICEROY HOTELS LIMITED	4,250,000
GEOMETRIC LIMITED	3,860,000
PUNJ LLOYD LIMITED	3,790,000
PRAJ INDUSTRIES LTD	2,798,000
TITAN INDUSTRIES LTD.	2,787,755
KAJARIA CERAMICS LTD	2,502,642
LUPIN LIMITED	2,183,581
KARUR VYSYA BANK LTD	2,041,224
PROVOGUE (INDIA) LIMITED	1,900,000
HINDUSTAN OIL EXPLORATION CO. LTD	1,887,273
BILCARE LTD.	1,735,425
VIP Industries	1,263,000
J.B.CHEMICALS & PHARMACEUTICALS LTD.	1,251,650
AGRO TECH FOODS LTD.	1,153,700
LUPIN LIMITED	1,065,254
TITAN INDUSTRIES LTD.	1,038,306
GEOMETRIC LIMITED	850,000
RALLIS INDIA LTD.	746,588
AUTOLINE INDUSTRIES LIMITED	731,233
ION EXCHANGE (INDIA) LTD.	650,000
PRIME FOCUS LIMITED	632,500
CRISIL LIMITED	550,000
VICEROY HOTELS LIMITED	500,000
INFOMEDIA 18 LIMITED	489,479
DWARIKESH SUGAR INDUSTRIES LIMITED	450,000
ZEN TECHNOLOGIES LTD.	450,000
ZEN TECHNOLOGIES LTD.	450,000
RISHI LASER LTD.	380,000
BILCARE LTD.	267,500
PRIME FOCUS LIMITED	250,000
INFOMEDIA 18 LIMITED	210,698

Buy sell Details of RAKESH JHUNJHUNWALA REKHA JHUNJHUNWALA NSE 2010

Till 2nd May 2010 There are just 4 Buy Sell Transactions of them which are given below

Date	Symbol	Share	Client Name	Buy / Sell	Quantity Traded	Trade Price
2-Feb-10	INFOMEDIA	Infomedia 18 Limited	REKHA JHUNJHUNWALA	SELL	2,93,356	36.35
26-Feb-10	SREINTFIN	SREI Infrastructure Finan	JHUNJHUNWALA REKHA	BUY	6,25,000	65.11
2-Mar-10	SREINTFIN	SREI Infrastructure Finan	JHUNJHUNWALA REKHA	BUY	6,25,000	69.31
8-Apr-10	MID-DAY	Midday Multimedia	JHUNJHUNWALA RAKESH	SELL	13,90,000	31.69

Rakesh Jhunjhunwla's Investment Portfolio - May 2010

Investment Portfolio of Rakesh Jhunjhunwla and Rekha jhunjhunwala as in May 2010:

1.AGRO TECH FOODS LTD.

NSE Code ATFL

BSE Code:500215

Last 1 Year Stock Chart

Latest shareholding Patterns are available upto Dec 2009
Rakesh Jhunjhunwala hold 1153700 Shares
While 849559 Shares are held in name of Rekha Jhunjhunwala

2.APTECH LIMITED
NSE Code : APTECHT
BSE Code :532475
Candlestick Stock chart of Aptech

In Aptech Rakesh and Rekha are listed as promoters.This is one of stocks in Which his charisma did not work
Stock is sinking like a stone Since Oct 2009
Rakesh hold 3152100 shares
while Rekha hold 2000000 shares
3.Alphageo (India) Limited
NSE Code:ALPHAGEO
BSE Code 526397
Rakesh hold 125000 shares of this scrip
very small stake in this company by Rakesh ji

4.AUTOLINE INDUSTRIES LIMITED
NSE Code: AUTOIND
BSE Code:532797

Rakesh Jhunjhunwala holds520000 shares while Rekha Jhunjhunwala holds 731233 shares as on 31st March 2010 as per Latest Shareholding Pattern

5.BILCARE LTD.
BSE Scrip Code : 526853
NSE Code:NA
Rakesh is currently Holding 1,735,425 shares while 267,500 shares are held in Rekha’s Name as per latest info available
Stock Graph

6.CRISIL LIMITED
NSE Code:CRISIL
BSE Scrip Code : 500092

Rakesh is holding 550000 shares as per March 2010 Shareholding Pattern
7.Geojit BNP Paribas Financial Services Limited
NSE Code :GEOJITBNPP
BSE Scrip Code : 532285
Sh Rakesh Jhunjhunwala hold 18000000 Shares

8. GEOMETRIC LIMITED

NSE Code: GEOMETRIC
BSE Scrip Code : 532312

As per Latest Disclosures 31 march 2010 Rakesh Jhunjhunwala hold 3860000 shares while Rekha Jhunjhunwala hold 850000 shares
9.Hindustan Oil Exploration Company Limited
NSE SCRIP Code:HINDOILEXP
BSE Scrip Code : 500186
Chart

Rakesh hold 5385143 shares while rekha Jhunjhunwala hold 1887273 shares

10.INFOMEDIA 18 LIMITED
NSE Code:INFOMEDIA
BSE CODE:509069

Rakesh sold holding in this share
Rakesh had holding of 210698 shares in Dec 2009 while Rekha was holding 489479 Shares

As per latest March 2010 shareholding pattern there is no mention of their name
it means if they are holding stake is very small
Details of stake selling is available HERE

11.ION EXCHANGE (INDIA) LTD.
BSE Code:500214
Rakesh Jhunjhunwala hold 650,000 shares as per march 2010 Shareholding pattern

12. JB CHEMICALS & PHARMACEUTICALS LIMITED
NSE Code : JBCHEPHARM
BSE Code :506943
Rakesh Jhunjhunwala is having 1,251,650 shares of this scrip as per dec 2009 pattern
Stock Chart

13. KAJARIA CERAMICS LTD
NSE Code :KAJARIACER
BSE Code:500233
Stock Graph

Rakesh hold 2502642 shares and this is one of good investments as seen in stock Price Chart

14.KARUR VYSYA BANK LTD
NSE Code : KARURVYSYA
BSE Code:590003
Candle stick Graph

Rakesh Jhunjhunwala is holding 2041224 shares

15.LUPIN LIMITED
NSE Code : LUPIN
BSE Code:500257
6 month Stock Graph

Rakesh Jhunjhunwala is holding 2183581 shares while Rekha Jhunjhunwala is currently having 1065254
Shares

16.MID-DAY MULTIMEDIA LIMITED
NSE Code : MID-DAY
BSE Code:532416

2250000 Shares were held in name of Rkesh Jhunjhunwala and he sold 13,90,000 shares on 8-Apr-10

Stock Technical chart of Mid Day multimedia

17.PRAJ INDUSTRIES LTD
NSE Code : PRAJIND
BSE Code:522205
Stock Chart

Rakesh hold 11678624 shares
while Rekha hold 2798000 shares

18.PRIME FOCUS LIMITED
NSE Code : PFOCUS
BSE Code:532748

Rakesh Jhunjhunwala holds 250000 shares while Rekha Jhunjhunwala holds 632500
shares as on 31st March 2010 as per Latest Shareholding Pattern
19.PROVOGUE (INDIA) LIMITED
NSE Code : PROVOGUE
BSE Code:532647

Rakesh Jhunjhunwala is an investor in this stock with holding of 1900000 shares

20.PUNJ LLOYD LIMITED
NSE Code : PUNJLLOYD
BSE Code:532693

Rakesh is currently Holding 3790000 shares

21. RALLIS INDIA LTD.
NSE Code : RALLIS
BSE Code:500355

As per Dec 2009 shareholding pattern Rakesh Jhunjhunwala was having 803088 shares while as per March 2010 his stake is 746588 shares.So 56500 shares sold.

22.RISHI LASER LTD.
NSE Code :Not Available
BSE Code: 526861
Stock price graph

Sh Rakesh Jhunjhunwala hold 380,000 Shares

23.TITAN INDUSTRIES LTD.

NSE Code :TITAN
BSE Code: 500114
Share graph of daily prices

As per Latest Disclosures 31 march 2010 Rakesh Jhunjhunwala hold 2787755 shares while Rekha Jhunjhunwala hold 1038306 shares

24.SREI INFRASTRUCTURE FINANCE LIMITED

NSE Code :SREINTFIN
BSE Code: 523756

This is new Investment Rekha Jhunjhunwala hold 1250000 shares
But NSE disclosures show two purchaes on 2-Mar-10 and 26-Feb-10 of total 12,50,000 shares!!!

25.VICEROY HOTELS LIMITED
NSE Code :VICEROY
BSE Code:523796
technical chart of VICEROY HOTELS LIMITED

As per Latest Disclosures 31 march 2010 Rakesh Jhunjhunwala hold 4250000 shares while Rekha Jhunjhunwala hold 500000
shares

26.ZEN TECHNOLOGIES LTD.
NSE Code :Not Available
BSE Code: 590032
Stock Prices Chart

Both Rekha Jhunjhunwala and Rakesh Jhunjhunwala hold 450,000 shares each

27.VIP INDUSTRIES LIMITED
NSE Code :VIPIND
BSE Code: 507880
Stock Daily price chart

As per Latest Disclosures Rakesh Jhunjhunwala hold 1263000 shares