From $100 to $5.8bn, Meet The Bull of Dalal Street

Also referred to as the Indian Warren Buffett, Rakesh Jhunjhunwala truly had the Midas touch.

Investing in India has been seen for several years now as a large opportunity. Offshore investors still struggle to get some access, but for those onshore and in the know, the potential for profits is high.

This weekend we focus in on Rakesh Jhunjhunwala, who jumped in following the opening up of the markets back in 1991 and made a fortune with his trading and investing.

Who was he?

Born on July 5, 1960, in Mumbai, India, Jhunjhunwala's early life laid the foundation for his future success. He graduated with a degree in Commerce from the Sydenham College of Commerce and Economics. His initial exposure to the financial world came during his college days when he began trading stocks with borrowed money. When we refer to the $100 in the title, this was reportedly the amount he borrowed from his uncle to get started.

He built his wealth through shrewd investments in various sectors, including technology, finance, and consumer goods. All of these were housed within his own company, Rare Enterprises, that he setup back in the 1980’s.

After amassing a fortune that Forbes put at $5.8bn in 2022, he sadly died due to acute multiple organ failure at the age of 62.

His investment vehicle, Rakesh Jhunjhunwala and Associates, continues to run the portfolio, with the current largest holdings shown below:

Investing Principles

“Buy right, sit tight”

In a similar way to other great long-term value investors like Warren Buffett, Rakesh built his core holdings through a philosophy of buying companies that have a strong competitive advantage and have a proven track record.

Once these have been identified, sit tight and don’t overtrade.

“Always go against the tide. Buy when others are selling and sell when others are buying.”

This quote rings similar to Buffett again when he speaks of being fearful when others are greedy and vice versa. The sentiment here is that during periods of panic, stocks can dislocate from their long-term fair value. That’s where buying comes in.

Conversely, during melt-ups and times of euphoria, chances are the market is nearing a top.

"Don’t try to catch a falling knife."

Despite wanting to buy on the way down, Rakesh makes a clear distinction in that he waits for prices to consolidate after a large fall first before buying. This ties in with patience from the first quote in that buying right can mean waiting for a stock to settle before buying in.

Best trades

When you combine his stock picking skills with his desire to hold shares for the long-term, some insane returns can be gained. One case of this is Titan Industries, that Rakesh first bought in 2003 when the stock was trading at INR 6.

He added to this position over time, with it now trading at INR 3070. As of 2021, he held a 5.1% stake in the company, which when converted to USD is worth over $1bn.

We don’t know exactly how much he invested to begin with, but from our maths his return over this time period is close to 500X…

Another early days investment that paid off incredibly well was Hindustan Unilever. This is the subsidary in India of the consumer goods company. It’s reported that this was one of his first investments back in the mid 1980’s.

In a similar way to Titan, the growth of the share price exploded thanks to measures taken by the Government in the 1990’s and the economic growth of India from 2010 onwards.

Even if we just measure the performance from the turn of the century, the stock is up 1,400%.

According to the latest filings from his portfolio, he no longer owns shares in the business.