Parag Parikh, 61 passed away today after attending the Annual Shareholders' Meeting at Berkshire Hathway. Ironic and tragic. Tragic because he was about to board a plane waiting for him in Nebraska, missed a signal and got hit by a Chevy pick-up van running in the right direction from the opposite side. Ironic, because from the age of 25, Parag Parikh became addicted to the world of Value Investing, then groomed himself in the style of Buffett and Graham and followed their approaches rigorously. The adrenalin from following the world's greatest investor kept driving him all his life - and in the end the same high got him knocked dead in the morning, after waking to hear the Sage of Omaha the previous evening.
I met Parag too in one of those years between the Harshad Mehta scam and the time that Templeton launched its first (and India's first) mutual fund based on the contrarian investing philosophy of Sir John Templeton. He was a stock-broker then and was rattling away the virtues of picking stocks at a fraction of their book value. He used to say the Indian Stock Market is going to reward the value investor just as any other market in developed markets if one pays heed to the legends of value investing. He was devouring books by Charlie Munger, David Dreyman, Christopher Browne, Bill Nygren and Howard Marks. His interest in picking stocks with a huge margin of safety got ignited after meeting his father's friend - the legendary investor Chandrakant Sampat who was the original big bull who had an unblemished record in the Indian Stock Markets. Groomed by Sampat, Parikh picked up as a stock-broker and started doing original research. As an ardent student of Buffett, he chose Indian Shaving Products (Gillette India) which saw huge unlocking of value before the Malhotras sold out. Since literature in the space of Investing was booming, Parikh derived "Ekalavya" wisdom from partaking in many books on Investing with a value bias. There was only one other erudite scholar who could vie for the top place as a pioneer in value investing - Chetan Parikh - who wrote extensively about the first generation of India's most famous stock-pickers in a book which is still a non-pareil "India's Money Monarchs". ( I only have a photocopy edition) but Chetan Parikh never ran a scheme or advised clients on money-matters. Parag Parikh, on the other hand, put his money where his mouth was. He wrote a book "Stocks to Riches - Insights on Investor Behavior" which set his ambitions high to be recognised as a thought-leader in Indian investing.
"Stocks to Riches" was a seminal book on giving more than orderly interpretation on how stocks should be only invested for the long run. This Jeremy Siegal-like approach was backed by a serious plan to walk the talk. He started giving lectures on Value Investing with plenty of Indian examples from VST Ltd. to HPCL and BPCL, Engineers India and L&T against conventional growth stocks like ITC and HUL. He formed Parag Parikh Financial Advisory Services (PPFAS) and started a Portfolio Management Services for investors with concepts baked from Behavioral Finance and cemented in the core of Value and Contrarian Investing - quality of management, track record, corporate governance, treatment of minority shareholders, public behavior, margin of safety, business models, and value drivers. In the late nineties and early 2000s, he built his brand equity with a regular appearance in all business channels as an expert with a behavioral finance touch. In 2009, he published his second book to accomodate more insights into Indian stock market. It was aptly called "Value Investing and Behavioral Finance" but the timing coincided with a juncture that saw most investors losing faith in Indian equities or even world equities. The book didn't fly off the shelves as anticipated but it became a much-cited book in the chronicles of the Indian Stock Market. Undeterrred, Parag Parikh continued his evangelism of the Holy Grails - Value Investing, Buffetism and Behavioral finance. His PMS now stands at around Rs.300 crores and sought out those who chase value and who understand greed and fear.
Parag's finest moment came with his decision to enter Asset Management Industry as a house without sales teams with himself and his team as the talking heads. He zeroed in on only one scheme with a tax-bias in favor of equity which commingled equity investments in India and overseas equities like Google and IBM and some debt and arbitrage exposure. It seemed to have run better than PMS and now counts a little under Rs.600 crores - still a far cry from the behemothic assets managed by fund managers who have outgrown Buffetisms like Prashant Jain and Sankaren Naren. The fund also advertises that the "insiders" (or promoters and fund managers) have invested into ten per cent of the corpus of the scheme. This is hardly disclosed by most houses. Parag Parikh's fund has delivered in the last one year an alpha of over 11 per cent over Sensex and over 7 per cent over the CNX 500. It is following a no-marketing approach to a fund that believes in buying fans on a cold day, ie. buying into stocks when the lemmings are headed the other way. Parag Parikh, in recent years, found company amongst many legendary investors in India who love the Value theme - Ramdeo Agarwal, Rakesh Jhunjhunwala, Ramesh Damani. Few of them make an annual trip to the living God of Value Investing. It was like making a trip to Tirupati to make a Darshan of your Lord but alas! the devotee got killed after the special darshan. Some day, when Indian Stock Market grows from its $2 Trillion Market-cap to a level that the world notices, remember this Ayn Rand fan who talked about Investing without behavioral traps and gaps and pushed the tradition of Value Investing into wider currency. May his soul R.I.P.
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