Who is Rakesh Jhunjhunwala?
Rakesh Jhunjhunwala is one of the most well known Stock Market investors from India. He is known as Warren Buffet of India. Warren Buffet was one time richest man on Earth.
He made his fortune by investing in stock market. Same is the case with Rakesh Jhunjhunwala as well. He has also formed his asset management fund called Rare Enterprise.
In this article I will list down all the stocks which are owned by him at this moment. After that I will periodically review (every quarter) about his holding and update the article. So you will always be aware of the latest happening.
I will also analyze these stocks in details. You can click on the stock names to read the analysis of them. I have written separate articles on these stocks as well.
The analysis is an aim to understand the investing methodology or rational on picking those stocks. Cloning is one best way to built your portfolio but you should also cross check if the time you are entering the stock is correct or not. You should do your own research as per your investment strategy and risk appetite before making a position.
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Interesting points about Portfolio
I will list down some interesting take away from the portfolio shared above. These points are interesting in the sense that it may help you understand thought process he has put into his stock selection.
I am listing my observations after having detailed scrutiny of the portfolio stocks and sectors he has shown interest in. Sectors are important so I included sector names along with stocks.
1. There is no IT stock
This is very interesting. The portfolio does not have a single IT stock in it. Many IT stocks were Multi bagger but he is not moved by or lured by their success. Some might claim First Source Solutions to be IT company but it is not.
First Source Solutions is in Business Process and does provide staffing services to IT companies. So in correct sense this company does not qualify as IT company.
We will see rationale behind this when we discuss other points in this article. After reading those you will be clear why he has not included any IT company.
2. No Auto Component or Auto Stock
This is other interesting aspect of the Portfolio. The portfolio only has one stock related to Auto Sector. The Autoline Industries is not Auto parts manufacturer or Auto company. It is a kind of services company for Auto Industry.
There are many Auto parts and Auto companies which were Multi Baggers in their own terms but they were unable to make their way in the portfolio. It is very interesting fact considering the point 1.
3. No Natural Resources company
By Natural Resources company I mean companies which deal with Natural Resources like Oil , Coal and other mineral resources. There is not a single company in his portfolio which belong to this business segment.
Sectors like Oil marketing companies or Metals and Mining companies or companies providing services to these type of companies are absent. For example Oil Exploration companies or Power generation companies are not part of his portfolio. These sectors are pretty much does not qualify to be part of his choice.
4. Pharma and Finance are Loved
Above I have mentioned companies or sector which does not find a chance in his portfolio. Now we will look into sectors which have good representation. There are more than couple of companies from Pharma and Finance sectors.
If you treat Private banks, Housing Finance companies and Financial Services companies as one lot then representation of Financial Companies make bulk of the portfolio.
He is not moved by recent bearish sentiments on Pharma sector due to generic drug initiative by Government and US FDA issues. Pharma is in Doldrums for quite sometime but still there are three companies in the portfolio.
5. Realty is not hated
If you combine Real Estate and Construction companies in one block then portfolio is having many companies from this sector. JP Associates is latest addition in the list as well.
Real Estate companies are struggling for quite sometime. There are some not so well known companies in the list as well. There is some rationale why this sector was represented by five different companies.
This strategy reminds me of Warren comment that if market is very bearish on something that gives you opportunity to buy that company cheap. Is this the philosophy used by Big Bull to accumulate these stocks at such cheap level.
What Portfolio tells about Investment Strategy?
I will try to understand the thought process of Big Bull based on the portfolio stocks. Note the price at which he bought these stocks require real conviction and character. These two things set apart a great investor from average one.
Having said that below are some interesting observation based on his portfolio allocation and planning.
1. Invest in Indian Economy
This one point sums up why he has not selected IT stocks in his portfolio. Big Bull invests in Indian Economy. He thinks India will outperform and grow from Developing to Developed nation.
In this growth trajectory the companies which will fit into the narrative were picked and those who does not were left. The main idea of IT industry is to offer skilled work force at lesser price.
For example if you are working in TCS or any other services company you will be working for any Foreign bank for that matter. Indian Services are preferred due to less cost and skill set they possess. If the same service is provided by other Country at lesser price (Philippines) then IT industry will have challenges.
The Indian operations of IT companies are limited as of now and they are very much dependent on US. This may be a reason why Big Bull does not invest in IT stocks.
Now if economy of a country grows then health of core sector like Financial companies grows. This is why there are multiple private sector banks in his portfolio. Also the buying power of people increases then he will buy products for consumption.
This will increase participation in Financial Services companies. These mood of people based on consumption theme is well used by Big Bull to design his portfolio.
2. Invest in Consumer Focused Stocks
This is core theme of Rakesh Jhunjhunwala’s portfolio. All the companies which are part of his Portfolio barring one or two fall in this category. He invests in stocks which create products used by general public.
He does not hold stocks which cater Industries or Business. This is interesting theme and have proved to be worth investing and taking note of. Walmart , Apple , Google and other similar large companies have products used by general public.
These companies are the largest company in World now. The companies which targeted Corporate customers are unable to beat these consumer focused companies.
This is single great learning from the portfolio. The message is clear invest in stocks with products consumed by end users. Note Crisil does not fit in this bill. But this company fits in narrative of growing Indian economy.
There is one other company Autoline Industry that does not fit in the theme.But most of the other companies do.
3. Give Importance to Core Sectors
Finance is core of any Economy. Many new comers to market does not have good representation of Finance companies. He has in fact multiple companies from Financial Services and Private sector banks.
The other core sector is Infrastructure. We have already covered his love for Infrastructure stocks. If Economy of a company improves or grows then Financial Sector companies will grow. This is simple relationship.
You may have seen branches of Citibank or HSBC in your locality. These are foreign banks doing operations in India. Similarly Indian banks can grow and open branches in other countries.
The gist is if country’s financial health improves so does the health of banks and other financial companies. This theme is used by Big Bull to make his investment decision.
Conclusion
Above I have tried to pen down my thoughts on thought process of Big Bull while selecting his stocks. The basic theme is Bullish on Indian Economy and Focus on Customer product based companies.
Based on this theme the investment is made. The important aspect is to identify the companies at right time. I will be analyzing all the companies in the portfolio. You can stay tuned or read the article on these individual analysis.
That would provide some idea about state of company as of now. You can make use that analysis to create your own analysis plan and see if it s fit your investing decision.
I will also be sharing portfolio of other eminent investors as well so stay tuned and see other portfolios as well before finalizing your watch list.