Chandrakant Sampat, guru of value investing, dies at 86

Chandrakant Sampat, considered by many to be the pioneer of value investing in India, died late evening Sunday. He was 86.

“His greatest contribution to the Indian market was that he shared his immense knowledge about investing by mentoring many aspiring investors,” Ramesh Damani, BSE broker and a value investor himself, told moneycontrol.com

 Chandrakant Sampat/MoneyControl

Chandrakant Sampat/MoneyControl

According to Damani, who counts himself among Sampat’s protégés, Sampat was the first investor in India who realized the powerful impact that compounding could have on investments.

“His investment philosophy as simple; identify great businesses and let the power of compounding do the rest,” Damani said, adding that Sampat would look out for businesses that would compound over many years, and not just one or two years.

“What many people do not know about Sampat is that he contributed to the coffers of the BSE through a simple advice that earned handsome revenues for the BSE over the years,’ Damani said.

Sampat is said to have suggested to the BSE that instead of a flat listing fee, the bourse should charge a fee linked to the number of shares the company was planning to issue. Every time the companies announced a bonus issue or raised capital through fresh issue of shares, the BSE would earn additional income.

Sampat was a first generation investor, who began investing in shares in the late 1960s. But his portfolio got a big boost only after multinational companies operating in the country were forced to list on the stock exchanges from the mid-70s onwards.

He began accumulating shares of blue chips like Hindustan Unilever (then Hindustan Lever), Procter & Gamble (initially RichardsonHindustan), Gillette (then Indian Shaving Products), and Colgate, from the time they went public.

Consumer goods firms dominated his portfolio all throughout. He had three main parameters in mind while looking to invest in a company. Minimum capital expenditure, at least a 25 percent return on capital employed (RoCE), and a record of paying generous dividends

He stayed invested in his favourite companies like Hindustan Unilever (then Hindustan Lever) and Gillete for so long that after the dividends and bonus shares, his average cost of acquisition came to a few paise in many cases.

Over the last 6-8 years, Sampat had grown wary of equity investing in general, saying he did not approve of the ways of aggressive managements and promoters, looking to enrich themselves without thought to the environment or minority shareholders. In an interview to moneycontrol.com in July 2013, Sampat said he had become gloomy on capital markets and had stopped investing some time back.

"Today, capital markets are blindly chasing growth achieved through reckless consumption, greed and fiat money," he said in that free-wheeling chat.


Updated Date: Feb 02, 2015 17:35 PM

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