Rocky's road to investing

Authors Neil Borate, Aprajita Sharma, and Aditya Kondawar's book is a simplistic take on India's most successful investor, whose Midas touch lay in an unfettered belief in India's growth potential

The Big Bull of Dalal Street: How Rakesh Jhunjhunwala Made His Fortune

Author:  Neil Borate, Aprajita Sharma & Aditya Kondawar

Publisher: Penguin

Prices: Rs 399

Ace investor Rakesh Jhunjhunwala’s ability to turn a paltry sum of Rs 5,000 into Rs 35,000 crore during his near four-decade investing journey is so legendary that it brought millions of dreamy-eyed wannabe investors into the stock market. Many try to emulate his portfolio but rarely do you come across anyone who’s been even a fraction as successful.

Given this backdrop, a book about how Jhunjhunwala made his fortune can be expected to draw curiosity and interest — more so since it has hit the stands within six months of the Big Bull’s untimely death at the age of 62 years. The three authors Neil Borate, Aprajita Sharma (both experts in personal finance) and Aditya Kondawar (popular on social media for simplifying finance) attempt to chart Jhunjhunwala’s investing journey, how he made his billions and his mistakes.

This is not an authorised account, so the authors have astutely used information available in the public domain to put together a 150-paged tale juxtaposing India’s economic journey and the Big Bull’s investments. The authors have interviewed Jhunjhunwala’s contemporaries Ramesh Damani, Shankar Sharma, Samir Arora and others who chose anonymity to provide context to his investment decisions.

Luckily, there is no shortage of public information on the man. Unlike most stock market stars in India, Jhunjhunwala, a larger-than-life personality with a penchant for the politically incorrect, was not publicity shy. He was a regular on TV, at conferences and other public events. People gathered in their thousands to hear his investment outlook and stock tips (which he famously refrained from offering).

The Big Bull of Dalal Street has three parts. “The Early Years” presents Jhunjhunwala’s family background, his entry into the stock markets and how the ace investors navigated tumultuous times such as the Harshad Mehta scandal or the 2000 dotcom bust. It tells readers how Jhunjhunwala before moving to Mumbai’s tony Malabar Hill had humble middle-class beginnings, staying in his father’s house even after marriage. He sold his Crisil holdings at his mother’s behest to buy a house, offering an insight into why Rocky, the nickname used by his friends, preferred equities over other asset classes.

Contrary to the popular notion that Jhunjhunwala started with just Rs 5,000, the book offers an interesting account on how he began with Rs 200,000 borrowed from acquaintances, who got their money back with high interest. Jhunjhunwala, a qualified chartered accountant, managed to double his investment in the first year by making successful short-term bets on stocks like Tata Tea and Tata Power.

The book also recounts how Jhunjhunwala went about investing in Titan — his most successful investment bet. In hindsight, investing in Titan  may seem a no-brainer today. But Jhunjhunwala backed the company when it was a poor performer, with even insiders unsure about its future. The Big Bull—who often invested in stocks without hard-core financial analysis—bought Titan, against his friends’ advice, as he was feeling “very bullish” even though a large block of shares of the watch maker was being offloaded by a big broker.  A chapter “Weathering Storms” touches upon how Jhunjhunwala stayed away from the late nineties tech boom, his early prediction of the 2008 market crash and tryst with the regulator.

The second part of the book is on Jhunjhunwala’s six stocks — three of which helped him build a fortune, while three turned out to be duds. This section is more of an account on the corporate journey of these six companies.

The authors leverage their expertise in personal finance to scrutinise Jhunjhunwala’s successes and failures, and point out that not all his strategies were for the ordinary investor. For instance, Jhunjhunwala had a huge small-cap bias, which the authors argue may not be the right investment approach. “Murky deals, price manipulation and forged financial results are all too common in the small-cap universe. Most of these companies do not even conduct earnings calls after the quarterly results. One has to invest in such companies with a pinch of salt. Finding gems in this space is not an easy task. It is better to leave it to the fund manager,” they write.

The book also highlights how Jhunjhunwala was careless about his health. And in Morgan Housel-style, they point out that Jhunjhunwala couldn’t take the advantage of late-stage compounding as did Warren Buffet, who made 99.7 per cent of his fortune after the age of 52.

Despite all this detail, the book is incomplete. For instance, the authors tell us little about Jhunjhunwala’s life. He is the son of an income tax officer and often credited his father and Radhakishan Damani (a veteran investor and promoter of D'Mart retail chain) for his success. Those aspects find little mention in the book. Nor does it delve much into Jhunjhunwala’s investment in unlisted stocks (such as Start Health, the second-most valuable stock in his portfolio after Titan) or how he went about identifying companies in which to invest. Most books on legendary investors such as Peter Lynch, Warren Buffet or Benjamin Graham are also textbooks on the science of investing. This book is a simplistic take on India’s most successful investor, whose Midas touch lay in an unfettered belief in India’s growth potential.

But until family members or friends decide to write about Rocky, this book is about as good as it gets on India’s most revered investor.