Jhunjhunwala breaks free of Warren Buffett-style investing

Ace investor Rakesh Jhunjhunwala, who has often been referred to as India’s Warren Buffett, seems to be distancing himself a bit from his mentor’s investment philosophy.

At a recent discussion organised by Motilal Oswal Securities, Jhunjhunwala partially debunked Buffett’s very long-term approach to investing, where he almost holds stocks for life.

“Every stock in life doesn’t have to be bought for 40 years. All of us cannot be Mr Warren Buffett in life, let me tell you. Just because he thinks that every stock should be bought for life does not mean that we should also buy every stock for life,” Jhunjhunwala said. The edited transcript of the discussion can be found at DNA newspaper’s website ( See here).

Jhunjhunwala, who has taken serious hits to his portfolio in the current market scenario, is clearly revising his investing approach.

Of course, there can be serious doubt as to whether even Warren Buffett adheres to his past style of investing. As _Firstpost_ noted last month, Buffett has broken some of his own taboos, including avoiding technology shares and debunking share buybacks. This year, he bought IBM shares and Berkshire Hathaway announced a plan to buy back its own shares.

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At the investment jaw-jaw session, where investment gurus Raamdeo Agrawal of Motilal Oswal, Madhusudan Kela and Ramesh Damani engaged Jhunjhunwala, the latter gave a new spin to Buffett’s idea of value-investing: “Value investing is also buying a stock, keeping it for 12-18 months and selling it at a handsome rate. Value investing is buying value where it may not (always) be lasting value. That value could be encashed over two or three years.”

One is not sure if Raamdeo Agrawal, another Buffett fan, agreed with Jhunjhunwala’s revisionist ideas on value investing, but he seemed to like the idea of blue-chip investing. Said Agrawal about his investing strategy in this beaten-down market: “I am aligning (myself) more to buy more blue-chips or emerging blue-chips. I look at individual companies rather than sectors and look at their performance. I don’t buy 10-15 companies in a year. If I can add one or two companies in a year, that’s good enough.”

Kela seemed more gung-ho about mid-cap stocks, which have simply been thrashed out of shape in the current bear market. Kela also thinks the real value of the NSE Nifty index is far lower than its current level because only “15-25 companies…are making this index.” His preference is for mid-cap stocks, which will deliver huge returns over the long-term.

As for the impact of the rupee, Jhunjhunwala, who once saw himself as a rupee bull, is now unsure. He thinks there is a 75 percent chance that the “rupee will lose more against the dollar” - a prediction that has already come true, as the rupee fell below Rs 53 on Tuesday.

Will the cheaper rupee bring in more dollar flows from foreign investors? Raamdeo Agrawal does not think so, because investors are still sitting on huge losses in India. “I don’t think it works. In fact, the guys who are there (in India) are going through their own pain after losing 35-40 percent of the year’s opening balance (due to the rupee fall). So, first that pain has to be handled.”

Clearly, even the best investing minds in India have been bamboozled by events of the last one year - from the euro crisis to the crimp in the domestic growth story.