Parag Parikh - The Doyen of Value Investing In India

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. 

#Parag Parikh #ValueInvesting #BehavioralFinance #ValueInvestinginIndia #ThoughtleadersinIndianStockMarket #IndianStockMarket 

Mary Buffett, Warren Buffett and Steve Jobs

Mary Buffett is the ex-daughter-in-law of Warren Buffett who has perfected the art of writing books about the craft of investing the Warren Buffett way. I think after the initial few books, her homework disappoints. Ever since her first book "Buffetology", I have been reading every book of hers invariably co-authored with David Clark. In the last few years, the pace of her writing has become hecti...c as she is turning this out into a Buffett franchise that should take care of her retirement planning. Warren Buffett - is the usual prefix - what follows are sub-titles like "management secrets", "the art of stock arbitrage", "the interpretation of financial statements", and now the latest "stock portfolio". I dont think she is able to add new stuff than her previous books in the new one which analyses for the nth time how to value GEICO or Coke or Washington Post and at what prices Buffett picked up. The trouble is when you run of the filial proximity to the Buffett family and the intellectual steam that used to oil the mathematical workings that underpinned her unveiling of the "secret" of a billion-dollar investment, you realise it is time to stop buying her books. You are better off following Warren Buffett's op-ed articles in NYT or his Annual Report letters (coming up in April again) or his occasional interviews in Fortune, Bloomberg (like the last article on Gold just a few days back). Its time Mary Buffett stops fooling the public with old hat knowledge. Her finest hour came with the Buffetology workbook and maybe those two books on Stock Arbitrage and Interpreting Financial Statements.


Talking about the franchisees - thats a whole new world - a sole preserve of American writers. My experience is that the publishers will churn out these titles on a binge until colossal failure greets them. Like "Rich Dad/Poor Dad" series or Donald Trump's "How To..." or those books by Jeffrey Fox or Ken Fisher. I am strictly limiting the references to books on finance and investing/real estate etc. Look at the heap of books that have come up within a month of Steve Jobs' passing. I found Walter Isaacson's bio the best biography but soon followed other rival reporters and greedy publishers - you have books promising more of Steve's "little kingdom" and I-quotes and other I-conic trivia. The franchisee builds to a crescendo then drops to a tedium faster than a S-curve. A great deal goes without quality checks - and one should discern well before picking such books. My threshold for picking such books is quite high - hence I usually learn the hard way after burning deep in my pockets.

Warrren Buffett in India Today

Warren Buffett may not be second-richest man on the planet but he has enough Ekalavya followers in India from RaamDeo Agarwal to Rakesh Jhunjhunwala and from Nilesh Shah to Prashant Jain. Not surprising his visit beginning today is generating blitzkreig publicity. Whatever he says - markets will gyrate in India interpreting madly like Wall Street. I hear people are getting re-born again to get themselves insured with Berkshire Insurance, some are buying hatchbacks to get new cars insured by Berkshire Insurance to grab a seat to hear the Sage of Omaha speak.
The demand for Buffett's books has always been good in India and I hear that sales of "The Collected Essays of Warren Buffett" has hit a four-year high in the last one month from publishers - a sign that Billionaires in India invited by the CII are ready to hear them so they can cut loose with their cheque books. But I guess many of them may be unfamiliar with Warren Buffett's methods of rewarding shareholders and transparency. Now, Buffett is going to talk about Charity (which already began at home for him and Gates) to Indian Billionaires. But I guess this is going to be a signature event - Indian Billionaires have made it big only in the last two decades after unshackling of the license Raj system. Its only now they are smelling the coffee - so to talk about pledging billions is not going to appeal to many. They will say they are generating employment already which has lifted many out of poverty. Besides, we have Tatas and Birlas used to doing philanthrophy in their own way - unassumingly and consistently. We must remember that Gates and Buffett have been icons of American capitalism who started pledging their billions only in the late nineties after decades of unbridled expansion and ambition. Indian businessesmen, on the other hand, do charity when they are growing as well - so this talk about cajoling them to pledge their millions is not impressive. At the end of Buffett's visit, I will not be surprised if a few more billion dollar deals are announced.
What is important, however, is that Buffett may be pleasantly surprised by the verve and vibrancy in the corridors of Indian Business, Polity and Parliament - if they keep their best foot forward as always happen. Buffett is himself a rank opportunist and he may not give anything away before he takes away more from India. In his annual letter to shareholders in 2011, I read that he was hopeful there will be no major catastrophe that will eat into his Reinsurance profits - and bingo, you had Japan catgastrophe which will nibble away some of the profits in Munich Re and other companies. He has never taken any exposure to India so far in underwriting of risk - so he and Ajit Jain, colleague are meeting IRDA chief J Harinarayan to assess whether Risk in India is profitable. Ask Indian businessmen on Risk, they can talk to Buffett on profiting from Risks here till the cows come home.