2. Chapter 4 – Anil Goel
• Introduction – Anil Goel ,66, started working in the family business of steel
trading while in college. He shifted to investing in Indian Equity Markets in the
early 1990s. A deep value investor, he buys substantial stakes in well managed,
basic business, when they are out of favor and are available at a very cheap
valuations. Overtime, he developed his investing philosophy of KCPLTD
(Knowledge, Conviction, Patience, Luck, Timely Deployment)
3. • How did you start investing in Stock Market ?
• Till the early 1990s, he had no views on the stock market. Around 1990s, his company at the behest of an auditor first
invested in a couple of IPOs to get some tax exemptions. It was an insignificant amount maybe Rs. 50,000. but it was
invested without any knowledge or conviction. So that was the first investment.
• He described those days were the point where everyone discussed in the gatherings. Which he says there was lot of
euphoria in the market. Going by the illogical prediction by seeing the stock prices moving everyday he predicted that
the market will crash. So it did crash in 1992, with the index halving to 4400 at that time. Pleased with the accuracy of
his predictions he became very interested in investing in market.
• First major success
In 1998, he started serious investing with a lot of lessons learnt and with a lot of maturity.
So he bought out stocks and lot of companies like EID, Carborundum, Tube investments, these co. had bought GDR in
1994. By 1998-99 they were available at 1-10% of GDR issue price, after 4-5 years of issue ! He bought stocks of these
companies. He also invested in stocks such as Kirloskar Oil engines, Unichem labs, Amrutanjan , IVRCL infrastructure.
Stock prices trebled and quadrupled by 2000.
So one of his strengths is to buy when the institutions are selling.
• Business Background helping in becoming better investor
Mr. Anil had a business background. So an edge in understanding business. The advantage for him was he knew to go
deep in the business, and align vision with the promoter and can forecast business better.
4. • Research and Investment Process
• Mostly investment in Small Cap where he aims to get a good multiplication of capital. Look to make Five to ten times of capital
over the next five years. Investment is into major small cap and out of favor companies or industries where there is no
competition among investors. Focusing on the right company and how that business will shape up in the next few year,
therefore important for honest management to be there in the business.
• Mr. Anil has investor’s club in Chennai where he meets and discuss idea. Some ideas might come from news and articles, also
he considers independent study.
• Clarity to not invest in Poor management, will be invested into good company with good management.
• Believes in 3 types of learning that is from other people(friends/parents/teacher), second is by reading/news, third is by self
learning (observing and experiencing)
• Also Developed investment philosophy called “KCPLTD”, which is Knowledge Conviction, Patience, Luck and Time Deployment.
Where he explains
o Knowledge – One should have deep knowledge of the business
o Conviction – Develop faith in one’s assessment.
o Patience – For the market to value your stock
o Time Deployment – Deploy the funds in the stock when the prices for the stock comes down.
• Advise to new investors
One should have an open mind and ability to change it. One should be active. One should have critical thinking and
questioning mind. Remain in the circle of Competence. Do not invest into sectors where you don’t have competence.
5. Chapter 5 – Govind Parekh
• Introduction –
Mr. Govind is a 59 years old Chemical engineer by qualification, started investing
journey in 1980s. Started as a stock broker, he became successful investor in several
blue chip companies very early. His process includes investing in top quality
business, backed by credible management at low market cap and holding that for a
long period of time. A strategy that has given excellent returns to him. He believes
in conservative, no leverage investing and selling stocks when they reach absurd
levels and keeping cash to buy in time when needed.
6. • How did you start investing in Stock Market ?
• After finishing his engineering he had no work experience and he immediately jumped into stock market. After his
father met with a serious accident then he planned to invest in stocks. After that he started following the markets,
interest for Mr. Govind grew when blue – chip companies were getting listed.
• Through his uncle Mr. Khandwala who recommended him stocks, after incurring profits used to book them. Peaked
interest in broking business by going to stockbroker’s office in Madaras Stock Exchange, sitting hours there and
understanding how market functioned and broking business worked. Started reading Sock market books and annual
reports.
• First major success
Initial big success was Ramco cements, seen the factory on a college visit. Equity capital was 3 crore and the PBDT was 9.5
crore. Mr. Govind had a thumb rule if PBDT of any good share is trading at less than 3x then it is considered cheap. For
valuation more than 3x had to study further. He realized that one should not only look at the past alone but should also
look at the future cash flow.
• Investment Process
• Mr. Govind take small positions if found something very good and will closely watch the company. And slowly build up
the position in a decided price range.
• Look at companies which had invested earlier, doesn’t look at many new companies
• Go to AGMs, visit Plant sites, meet the Distributors, try to meet the company management, read research reports.
7. • Advise to the new Investors
Mr. Govind suggests that the market on the whole is bigger than any individual investors and therefore one has to be humble.
Follow Discipline and patience which are very important attributes. Being a good investor also requires to be open minded and
quickly correcting the mistakes, Once you have grown the size of the Portfolio it’s better to grow consistently and protect the
capital as much as possible.
Read as much as possible and inculcate a habit of meeting as much experts as possible (both the investors and companies).
Sir suggests to take a look at targeting CAGR of 20-25%. After generating good returns take out some cash and follow the same
principle with the rest invested. When the market crashes, deploy the funds into the market. Try to generate higher CAGR as
much as possible and grow your capital after every 2-3 years, invest in Blue chip companies.
• Key risks to see at country level.
The biggest risk in his mind his unemployment and social unrest. With more technology fewer people will be required now.
Government will have to take steps to prevent social unrest.
8. Chapter 6 – Bharat Jayantilal Patel
• Introduction – Mr. Bharat Jayantilal Patel started his career in equity broking
before transitioning to managing his own proprietary investments, over the last
15 years his skill at identifying under valued small and mid cap stocks have
translated into great returns. He is also known to be an activist investor to ensure
he gets full value to his investments.
• Sir’s family background was that of cotton merchants. Sir is qualified as Charted
Accountants. Sir started broking business in Mumbai.
9. • Sir’s opinion on Broking Business.
You need to have large setup to sustain the business now. Major brokerage business comes from FIIs, who focuses on few
large brokers only, Right now good business is also coming from domestic mutual funds. The way the compliance
requirements are increasing, there is little space for smaller brokers to grow and only large brokers will be able to sustain.
• Initial Investment Philosophy.
Sir’s initial investment philosophy was developed in 2002-2004. Coincided with the time when BJP led NDA government was
changing and economy was changing due to certain steps taken by the government like disinvestments. India had started
coming up on the real map of FIIs and the participation by Indian citizens in the markets was also growing Mutual funds was
also growing.
Sir’s logic was simple “Buy low, Sell High.” Sir did not believe in Averaging Up and neither did Sir were fearful when the market
went down.
After investing in the company, Sir will wait for 3-5 years to see if the invest has been working or not. It also depends on the
interaction with the company management.
• Return Filter when you make an investment ?
Sir is happy when sir get 24%+ CAGR in mid and small caps. Sir has stopped looking into Mid and Small cap, because the
amount of money put in is limited by Sir. Also sir is investing in companies with 2000cr market cap companies where sir
expects to generate 18%+ CAGR.
10. • Investment and Research Process
• Earlier Sir used to read 150 – 200 Annual reports every year. But now sir focuses on MD&A and focuses on what
management is saying. To know what the management is saying is good or not, meet the management, Investors
should meet the management in the AGM and question them and corelate with the result, if it does then things are
right.
• Sir considers cumulative knowledge experience, is always there in your memory. Experience should be supported by
additional information and data while making investment decisions.
• Attributes that are important to become a successful investor
• Understand the business in which you invest reasonably well. One should have conviction . Conviction is very
important.
• There are simple rules that need to be followed strictly and implemented.
• Do not be fearful when the market is down. Do not be greedy when it is going up. This means Buy low and sell
high
• Invest in promoters where corporate governance compliance is in its true spirit.
• Do not buy on hearsay and do not take investing casually or as side activity.
• Major mistakes Sir has seen people make in the markets.
After some level of success, you start feeling like God. People surrounding you people start believing as if you are God and that
will impact your own thoughts. You start taking money in casual manner. Be patient and act like it is your own money and do
not treat stock market like a side activity.
