Rakesh Jhunjhunwala — Investor, optimist and dream merchant

16 Aug 2022 , 12:49 PM

Walking into Rakesh Jhunjhunwala’s office at Nariman Point in South Mumbai for an official business meeting in 2004 was almost like an investment pilgrimage. You expected someone as esoteric as Warren Buffett and as reclusive as John Paulson. Rakesh Jhunjhunwala, at first impression, is lot more informal compared to the more stiff upper-lip investors you see.

However, it takes just a few minutes to realize that you were sitting in front of a man with a razor sharp mind having algorithms on his finger tips and an out-of-the box approach. After the 1 hour meeting, we tried to summarize the man. Rakesh Jhunjhunwala was obviously super confident, an undying optimist, an indefatigable fighter and one of the greatest believers in the India story, long before it become so passe.

Fairy tale story comes to an abrupt end

The story of Rakesh Jhunjhunwala is the stuff that legends are made of. He started with a capital of Rs5,000 and when he passed away on the 14th of August 2022, he was worth Rs46,000 crore. It is pointless to even calculate the CAGR. At a whopping 64.2% CAGR return over the last 37 years, his performance is 3.5 to 4 times better than Sensex annualized. Of course, some of his portfolio picks like Titan and Lupin are aspirational stuff. He bought these when they were literally penny stocks. Today out of his $5.5 billion portfolio, Titan alone is $1.5 billion while Star Health Insurance is $1 billion.

It is rather ironic that Rakesh Jhunjhunwala passed on just a day before the 75th anniversary of Indian independences (Azadi ka Amrit Mahotsav). For a man who was incredibly passionate about the India story and was always keen to sell the Indian dream to investors, he would have perhaps felt a sense of redemption watching the 75th anniversary celebration. However that was not to be!

Some big hits and a few big misses

One thing Rakesh loved to tell investors was, “In markets, it does not matter if you are right or wrong. What matters is how much money you make when you are right and how little you lose when you wrong”.  For a man who transformed Rs5,000 into Rs46,000 crore over the course of 37 years, he obviously was right more often. Some of his big multi-bagger stocks include the likes of Titan, Lupin, Tata Motors, CRISIL etc.
Rakesh was also extremely good at timing the impact on news flows. In the last one year, he was among the early investors to catch Canara Bank well before the turnaround in PSU banks started manifesting. He also turned very positive on India Hotels ahead of the bounce in the contact intensive sectors post the COVID relaxation. In both cases, he was right on target and saw a sharp appreciation in value.

However, Rakesh had his share of failed stock picks too. He was extremely positive on Geojit but the stock never lived up to the promise and is around one-third of his purchase price. Another such stock was JP Associates, which went into bankruptcy under a pile of debt. But the one decision he would really rue would be his optimism on Dewan Housing, which plunged in 2018 and was eventually bought out by Piramal. But for a man who wielded the magic wand, such mistakes were an exception than a rule.

Was he really the Indian Warren Buffett?

Comparisons are odious but there are some sharp similarities in their approaches. For instance, both played for the very long term. For instance, Buffett has been holding Coca Cola, AMEX and BankAm for generations. Similarly, Rakesh has been holding stocks like Titan, Lupin and Crisil for well over 2 decades. Secondly, both Buffett and Rakesh resisted the fads of the day. Buffett kept himself away from the IT plays of 1999 and the digital plays of 2010. Rakesh also stayed away from IT and digital stories for most of his career.

In his previous annual letter to shareholders of Berkshire Hathaway, Buffett had warned his shareholders, “Never bet against America”. His marquee portfolio still consists of companies like Apple, Chevron, Occidental, Coca Cola and Amex; all hard core American brands. In a sense, Rakesh had been the first big believer in the India story. His India portfolio has largely reflected consumer stories like Tata Motors, Titan, Metro Brands and VIP Industries. Unlike Buffet, Rakesh Jhunjhunwala cut his teeth as a short seller when the aura of Harshad Mehta was fading. Eventually, he became a perpetual bull on Indian equities.

Tributes capture the enigma of the man best

No less a person than the prime minister himself tweeted that Rakesh Jhunjhunwala would be remembered for his sense of humour and his indomitable spirit. One had to only listen to him for a few minutes to end up smiling at his humour. His humour may not always have been socially and politically correct, but he would not care less. And his disruptive thinking was best captured in the launch of Akasa Airlines, just a few days before his passing away. It was a monumental risk since no private player was really laughing all the way to the bank with an airline business. But that was Rakesh, at his best, unwilling to let empirical data get the better of his convictions.

As it dawned on Indian investors that the Pied Piper of the Indian stock markets was no more, tributes flowed in thick and fast. There was fulsome praise for his spirit, his generosity, his philanthropy, his Bohemian lifestyle, his analytical rigour and his humility. However, one tribute perhaps best captured the gist of the man beyond the numbers. That tribute came from Shankar Sharma of First Global. He right said that in the market obsession about numbers, growth, wealth creation and portfolio value; they must not forget the biggest contribution of Rakesh Jhunjhunwala. His real wealth was the wealth of ideas, knowledge and intellect that he brought to the trading game.

That is perhaps how Indian investors should remember Rakesh Jhunjhunwala. That is how, perhaps, the Biggest Bull of the Indian markets would love to be remembered.