Introduction
Life of Rakesh Jhunjhunwala is an awe-inspiring tale of a boy from a humble household of a middle-class Income Tax officer and his rise to the Forbes’ List of Billionaires 2002. He is often referred to as India’s own Warren Buffet. As the 54th richest man of India, he is the chairman of Hungama Media and Aptech. And sits on the board of directors of firms such as – Viceroy Hotels, Concord Biotech, Provogue India and Geojit Financial Services (Source: Wikipedia).
Childhood
Rakesh Jhunjhunwala’s father was an Income Tax officer, exhibited an interest in market movements and discussed it with his friends regularly. Young Rakesh Jhunjhunwala came into scent with those conversations at an early age and grew fond of the markets.
He would ask his father details about the whole stock market and how business orbited around it. Motivated from a young age, after his graduation in Commerce from Sydenham College, he became a Chartered Accountant from the premiere Institute of Chartered Accountants of India (ICAI).
The Big Bull enters the ring.
After attaining his degree, he decided to jump headlong into the Dalal street. In 1985, Jhunjhunwala invested Rs 5,000 as his starting capital. By September 2018, the wealth created from that capital alongwith his networth was an estimated ~INR 11,000 Crs.
Jhunjhunwala was told by father to read newspapers regularly as it was the news that made the stock market fluctuate. While his father allowed him to dabble with the stock market, he refused to give him financial aid and forbade him to ask friends for money.
But Jhunjhunwala was a risk-taker right from the start. He borrowed money from his brother’s clients and promised to return the capital with higher returns compared to fixed deposits that banks offered.
Every trader reminisces their initial trades or investments and attaches it dear to their hearts. For the Big Bull, he earned his first big profit in 1986 when he bought 5,000 shares of Tata Tea at Rs 43, and the stock rose to Rs 143 within three months. it was his first 3+ bagger.
Over the years, Jhunjhunwala has invested in Titan, CRISIL, Sesa Goa, Praj Industries, Aurobindo Pharma and NCC.
A Titanic Story
Titan is one of the investments where he has made more than triple-digit returns. He is a keen investor whose never-ending love for Titan Company (earlier Titan Industries) began over 21 years ago. His Titan(ic) journey will leave you spellbound for days, I promise. Buying 6 crore shares between 2002, at an average price of Rs.5, he has been minting since.
In 2003, he believed India would grow at a rate of 8% p.a. and this would give a huge push to the FMCG sector. Titan at that point had 60% of the organized watch industry and a insignificant share in the jewellery business.
The stock is currently trading at INR 1,233.50 as of 20th October 2020. On calculating the percentage returns your calculator might give you a headache.
Mentors
Rakesh Jhunjhunwala associates a big part of his success to Mr Radhakishan Damani and his father. Mr Radhakishan Damani is a keen investor and entrepreneur, and the owner of Indian Retail giant D-Mart. Radhakishan Damani, Rakesh Jhunjhunwala and Raju (A chartist ) were the so-called 3 R’s under Manu Manek’s bear cartel. Manu Manek was one of the most influential operators in the Bombay Stock Exchange.
Approach towards investing and trading
Trading and investing is an art, something that requires you to have a creative approach and at the same time, be versatile to the dynamic markets.
Rakesh Jhunjhunwala’s approach towards markets is simple yet so elegant. He associates trading as the mother of all his wealth and claims it to be the primary source of money for his investments. Not everyone is aware that he is as shrewd a trader as he is an investor, something that separates him from other giants in the world of the financial markets. He can switch hats with comfort and take a trading call on a stock, commodity or an index, even while assessing the long-term growth and prospects of a potential investment or the economy.
The ace investor keeps aside usually 5 percent of his portfolio towards debt. “But between September 2001 and September 2003, I carried debt which was at least 40 per cent of my portfolio,” Jhunjhunwala revealed in one of the events – Pointing out his flexibility and approach towards varying market conditions.
Just as markets go through several ups and downs, so has Rakesh Jhunjhunwala’s portfolio and run in the Dalal Street. No successful investor or trader has ever had a smooth sailing journey, massive drawdowns are part and parcel. After the 2008 global recession, his portfolio fell by 30%, but he eventually regained from the loss by 2012.
He has a terrific ability to use leverage at the right time and take large bets and positions when he feels there is an asymmetric opportunity favouring him. And at the same time, has no qualms admitting he is wrong if the position or trade goes against him. He often says, in trading “you don’t argue with price”.
Philanthropy
Warren Buffet, widely known for his investments and philanthropy, has donated almost half of his fortune to charity. A fundamental similarity of Rakesh Jhunjhunwala with Warren Buffet is his firm belief of giving back to society.
His philanthropic portfolio includes nutrition and education. By the year 2020, Jhunjhunwala intends to give away 25 percent of his wealth to charity. His philanthropy provides for contributions to run shelters for cancer-affected children, creating awareness among children on sexual exploitation. He also supports Ashoka University, Friends of Tribals Society and Olympic Gold Quest. At the moment, he is in the process of building an eye hospital in Navi Mumbai, which will perform 15,000 eye surgeries for free.
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