After investing in upto 100 companies throughout his life, Rakesh Jhunjhunwala finally revealed the reason behind his success in the trading and investment sector which includes his 84 companies’ analysis over the past decade where he still holds at least 1% stakes. There are only 9 corporate houses where he holds major stakes since 2005. These companies include Crisil Ltd., Lupin, Bilcare Ltd, Viceroy Hotels Ltd., Titan Co. Ltd and others. The 55 years old finance specialist is an active member on the Board of Directors of many companies such as Bilcare Limited, Concord Biotech Limited, Geojit BNP Paribas Financial Services Ltd., Prime Focus, Top Security Ltd., Nagarjun construction Companies to name a few. The man has also chaired the top most position of Aptech Limited and Hungama Digital Media Entertainment Pvt. Ltd.
In comparison, the average holding period for diversified equity mutual funds has never exceeded two years in the last decade, according to data from fund-tracker Value Research. The minimum was 0.93 years in September 2009, just after the outbreak of the global financial crises. The peak was 1.92 years in March 2015.
There is a caveat to this analysis of Jhunjhunwala’s holdings: Information is only available for companies in which his stake exceeds 1%, and is therefore mandatorily required to be disclosed. The analysis looked at 84 such stocks. There are also companies in which he bought and sold his shares, only to buy again later. These were counted as separate investments, with returns being calculated for each entry and exit. The total number of investments thus comes to 91. The analysis does not consider parts of his portfolio about which information is not publicly available. It can therefore only be considered indicative and not necessarily representative.
The analysis shows that his average returns have been highest from the stocks he held the longest. His average absolute return on stocks he held for at least 10 years was a staggering 3,271.52%. And his average return on stocks he held for less than a year was 9.23% (chart 1). These returns are a simple average of the returns of stocks in his portfolio irrespective of their weight in the overall portfolio.
Jhunjhunwala’s three biggest publicly disclosed bets are all more than 10 years old. This includes Titan (Rs.2,720 crore), Lupin (Rs.1,270 crore) and Crisil (Rs.789 crore). This accounts for more than half of his declared portfolio of Rs.8,663.33 crore, according to September quarter-end disclosures. His top sectoral bets include pharmaceuticals, information technology and computer-related companies, construction and auto and auto ancillaries in the September quarter.