Contributed By : Gaurav Kaushik, CFA
The Delhi chapter of CFA Society-India had the privilege of hosting some of the most famous pioneers of Value investing in India during its inaugural Value Investing Summit on 21st Sep 2017.
The bad weather at Mumbai and all the hassles at the airport that Mr. Raamdeo Agrawal had to endure couldn’t dampen his zeal even one bit as he shared his remarkable journey in the equity markets-from 0 to 1300Cr. spanning 30 years !
As a young Chartered accountant in Mumbai, Raamdeo found his calling early and he teamed up with Motilal Oswal in the late ‘80s to start their broking business. His investment portfolio grew rapidly during the bull run of ‘91-92.The subsequent crash saw the value plummet by 2/3rd, but by then he was firmly established in business and had created a decent corpus. His outlook changed when he met Mr. Warren Buffet in 1994 .He made Buffet his guru and hence started his journey as a value investor. Following Buffetology and annual trips to the AGM in Omaha made him wiser. He could handle the subsequent peaks (2000,2008, 2014) & troughs (2003,2009) with equanimity .His value investment mantra is summed up in 4 phrases viz. Quality of business and management, Growth in earnings ,Longevity of Q&G and reasonable Price (QGLP).
He freely shared his learnings and beliefs with the audience. According to him equities is a very powerful instrument.It is a hedge against inflation and tax. Purchasing power doubles in equities in 7 years while it takes 70 years in fixed income. He explained how the principle of compounding works beautifully in equity investing.
He shared some of his most successful picks viz. Vysa Bank (1991),Hero Honda (1996),HDFC Bank (1996),Infosys (1997),Bharati Airtel (2003), Eicher Motors (2012),Ajanta Pharma (2013),AU Financers (2007) and also some bad ones like Mastek (2000) and Financial Technologies(2014)
He shared some unique tips on understanding management and business. He said while visiting a company he also focuses on how the company treats its staff. He believes that is how they will treat their minority shareholders. Also how meeting with large dealers in tier II and III towns can sometimes reveal much more about businesses and their management vision than the meeting the management directly.
Raamdeo recommended some books to the audience which he found very interesting and urged everyone to read them. These were Common Stocks Uncommon Profits by Philip Fisher,Competitive Strategy by Micheal Porter,Berkshire Hathway letters to shareholders,Value Migration by Adrian Slywotzki, Value Investing- Buffet and Beyond, Expectations Investing by Michael J Mauboussin.
India took 58 years to reach the one trillion dollar GDP mark, however the second trillion took just 7 years,according to Raamdeo every subsequent trillion dollar addition to GDP will happen much faster. He said that by thinking big and positive, using the power of compounding and following his investment mantra anyone can achieve similar success in their investment portfolio.