Stock strategy: What is Rakesh Jhunjhunwala really up to?

He has been called India’s Warren Buffett, but Rakesh Jhunjhunwala has written his own rules of investing which do not always involve going by the Buffett rule-book.

In recent times, he has woven in and out of stocks that caught his fancy, and he has been burned as often as he has set the tracks on fire. Unlike Buffett, Jhunjhunwala seems to have a different buy-and-hold time horizon. Last year, BusinessLine reported on his entry and exit rate in stocks. Of the 10 shares in which he had major investments in September 2011, he got out of five a year later. That’s a 50 percent exit rate in one year.

Business Standard also discovered a fairly high churn rate last year. As on 30 September 2012, Jhunjhunwala had raised his stakes in Titan Industries, Rallis India, and Agro Tech and bought fresh into DB Realty. But he cut his exposures to Crisil, Praj Industries and Adinath Exim Resources.

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The Economic Times today (24 October 2013) tells us what he is upto now. Apparently, Jhunjhunwala’s top six bets since July 2013 include Dewan Housing Finance Corporation, Escorts, Firstsource Solutions, Kesoram, NCC and VIP Industries. On the other hand, data available with the stock exchanges showed that JhunJhunwala and his wife Rekha Jhunjhunwala together dumped Lupin, Titan Industries, Crisil and Hindustan Oil Exploration.

[caption id=“attachment_560784” align=“alignleft” width=“380”]  His stakes in SpiceJet, Anant Raj, Bilcare, Geojit BNP Paribas, Sterling Hotels and Prime Focus remained unchanged for the quarter. Reuters[/caption]

His stakes in SpiceJet, Anant Raj, Bilcare, Geojit BNP Paribas, Sterling Hotels and Prime Focus remained unchanged for the quarter.

Jhunjhunwala also raised his stake in Pipavav Defence to 1.43 percent (Rs 54.75 crore) at the end of the September quarter from 1.39 percent in the June quarter.

On 19 October, Jhunjhunwala bought 25 lakh equity shares (or 1.94 percent of total paid-up equity capital) of Mumbai-based Dewan Housing Finance Company.Although the stock is up 15 percent in the last one week, it is down 26 percent in the last one year. What Jhunjhunwala buys often impacts stock prices, especially if the stocks are thinly traded.

Jhunjhunwala picked up 4 percent stake in BPO Firstsource Solutions for an estimated Rs 25 crore from private sector lender ICICI Bank and others on 4 July 2013. The stock is up 81 percent in the last six months.

On 8 July 2013, Jhunjhunwala increased his holding in NCC Ltd above 10 percent mark by acquiring additional shares through market purchase. Rakesh Jhunjhunwala along with Rekha Jhunjhunwala, Rare Investments, Clue Leasing and Finance, Hilcroft Investments and Rare Share and Stocks has acquired additional 6.47 lakh shares in the company.The stock is down 5.47 percent in the last three months but up 7.8 percent in the last once week.

The logic of Jhunjhunwala’s purchases is not clear, unless the idea is to punt on beaten down stocks and hope to gain later when the overall markets pick up. DHFL, for example, is promoted by the owners of HDIL, a real estate major which recently faced a technical default on interest payments.

As for VIP Industries, the company has faced a tough time having tied the bulk of its fortunes to sourcing from China - which has been impacted by a weak rupee. Is Jhunjhunwala betting that once the rupee rises, VIP will rebound?