You can switch off notifications anytime using browser settings.This Delhi investor learnt trading in school of hard knocks, makes it bigStock Analysis, IPO, Mutual Funds, Bonds & MoreThis Delhi investor learnt trading in school of hard knocks, makes it bigAveek Mitra has been active in the investing world for over 21 years now.Aveek said most of his failures came from selling early and not being able to hold a stock longer.
If you want to become a successfulstock investor, you have to invest your own serious money based on your capacity. Passion is most important here, says Delhi-based investor Aveek Mitra.
Aveek has been active in the investing world for over 21 years now. He has a passion for spotting quality stocks, some of which have delivered him mindboggling returns.
He claims he was an early investor in drug majorSun Pharma. Though he managed to invest a very small amount in the stock, it delivered 50-bagger return over 15 years. Aveek sold the stock in 2016.
He claims to have earned over 700 per cent return from IFB Industries, 900 per cent from V Guard, 433 per cent from Ajanta Pharma and over 200 per cent fromZydus WellnessandKitex Garmentsover the past few years.
He currently holds Dilip Buildcon, JBM Auto, Cords Cable,Asian GranitoShiva TexyarnZen Technologies, Centrum Capital and Edelweiss.
ETMarkets could not independently verify his holdings back then and now, as none of his stakes were above 1 per cent, the threshold beyond which companies name their investors in shareholding reports.
However, Aveek did produce an audited certificate for 2 years, reflection the returns on his portfolio.
At 50, this Bengali with more penchant for stocks than fish, says he is currently looking for gems in capital goods, infrastructure, building materials, real estate and niche IT product or services sectors.
The skill to spot a quality stock can be developed over the years, if one has the passion, but its not very easy, says he.
One should try to develop his own line of thinking and invest in a way that matches his profile and personality.
It would disastrous to copy someone blindly, as someone elses motivation to hold an investment may be 10 years and yours could be just two. Jumping on to an investment just because some famous Mr A, B or C has invested in it may be counterproductive, unless you know how much percentage of his overall portfolio is invested there or what are his expectations out of it, Aveek said.
Investment lessons can be learnt only in the school of hard knocks! Unless you invest your own money, and that too serious money, based on your capacity, you would never know if you are fit to manage it on our own, says he.
Aveek generally aims for 30 per cent CAGR (compounded annual growth rate) kind of return on his portfolio, rather than looking for stock-specific success.
A 30 per cent CAGR return can double you money in less than three years.
Aveek says his investment strategy is always bottom-up and starts from a sectoral outlook, where he feels there is a tailwind. I seldom try to seek valuation comfort in an out-of-favour sector. Once we identify the sector, we look at almost all major players in that sector, try to identify the similarity or dissimilarly among different players, look at their competitive strengths, past history, management quality, financial and liquidity profiles and them try to figure out if they can do disproportionately better than the overall sector at least in the medium term. Rest is valuation, he told to ETMarkets.com.
He does not invest in very small or a new company if it has a short history.
Aveek is a hard-working investor, who is never tired of studying companies to invest in. His approach is unique, in the sense that he is not afraid of buying poor quality companies provided he can get the valuation right, says Abhishek Basumallick, a value investor himself.
Basumallick says Aveek has been successful by going off the beaten track. I find it comforting to bounce off ideas with him, because his style is so different from mine, that I always get a different perspective, he said.
Aveek doesnt prefer to call himself a value investor. I dont really know what is the practical definition of a value investor. I think everyone seeks some value out of their investments, even though everyone strives in a different way.
Aveek runs a Sebi-registered investment advisory firm, called aveksatequity.com.
My first and foremost responsibility is to protect capital and steadily grow what is entrusted upon us, he said.
He said to be a successful investor one needs to have basic grasp of accounts and finance, as the language of communication in business is financial numbers. Its the bare minimum requirement to understand the numbers given out by the company. This is the first step, says he.
Beyond that one has to have a good understating of the business ecosystem of a company, industry, economy and global competition.
Aveek says one should have the ability to connect multiple seen, unseen and probable dots in his mind in order to be able to have a clear hypothesis about why one is investing in a stock and why it is better than other options available.
It is better to read as eclectically as possible. It helps in many direct and indirect ways to connect many dots and identify many patterns. The skill can be developed over the years if one has the passion. Its not very easy, he says.
Before investing one needs to ensure if he is comfortable with volatility and uncertainty involved in investing. Unless one is clear about the path s/he is charting to reach the desired destination, the journey itself becomes so bothersome that s/he will be forced to leave it halfway, said Mitra.
Ones investment should actually match ones own psychology. Otherwise, one is bound to make mistakes in a volatile market, fall prey to conflicting market signals and to the tremendous amount of noise generated by media every day, he warns.
Aveek entered the stock market at 29. He says he was late because he didnt have the money to invest and the courage to manage it himself.
In his early investing days, he invested based on the recommendations of a broker friend, and in the process he ended up with half his investment in six months! That was his only savings then.
I primarily tried to understand, started reading very seriously and the passion grew over time as I got deeper into it. I learned it initially out of desperation, which transformed into a passion with the passage of time as I tasted success and gathered confidence, he recalls.
He became a full-time investor in 2013. Prior to that, he was holding senior positions in various companies in India and abroad. Till then, his investment was spread across broader themes and directional trends, based on numbers presented in quarterly results and annual reports.
Since 2013, he became more oriented towards micro details of the company. I can now invest in not so known companies as I have more time and resources to research about them. I can even do field research, collect primary data, talk to people, meet managements at different investors meets. But the overall thinking process remains more or less similar, though always evolving, he says.
Aveek said most of his failures came from selling early and not being able to hold a stock longer.
It is a psychological weakness which I am constantly trying to overcome. I am getting better at it, as I realise time correction, rather than price correction, happens most cases in our market. If the quality of a business and the pedigree of the management is good, hold it. Stocks like Tata Steel, Kaveri Seed, TD Power Systems gave me lemons. I lost more than 25 per cent for selling my positions quickly, says he.
The single biggest loss he bore was in Escorts, which he has bought at about Rs 220 and sold for Rs 90 sometime between 2010 and 2013.
If a stock goes down 20 per cent, then it has to come up by 25 per cent to recover my capital, but if it goes down by 50 per cent, then it needs to be up 100 per cent to regain my capital, says Aveek.
Capital protection and locking gains is of paramount importance to me, I am quite uncomfortable if my stock goes down more than 25 per cent from my buy price. I am very particular about the price I pay as its the only variable which is in my control. Rest of the things are uncontrollable variables, depending on how much I know or I pretend to know, he says.
His wisdom: Being overconfident is one of the gravest errors. Its better to be humble to remain liquid and remain solvent to play the game for a long time.
Aveek is a voracious reader. He reads books from across disciplines be it psychology, economics, science, politics, history, biographies, spirituality, evolution, ethics, law and at times investment books referred to him by friends.
After a while, incremental learning from reading investment books is pretty limited. I also read annual reports of companies on a daily basis, besides research reports of various research houses. I also watch videos of more successful investors, he says.
Aveek generally does not follow any specific investor, but keeps track of investments that stalwarts make and try to figure out why someone finds a company interesting.
I got many good investment ideas following investments of known investors. But I invest based on my own convictions, though ideas may have originated from someone elses purchase, he says.
Commenting feature is disabled in your country/region.
DownloadThe Economic Times Business News Appfor the Latest News in Business, Share Market & More.
Sensex surges ahead of exit polls outcome; key factors that fuelled the rally
10% upside or 20% downside? Here are the projections for result day market swing
Indias second biggest fund house busy lapping up stocks that are down 45-72%
12 smallcaps that are impervious to market swings, rising every month
YES Bank at over 5 month low; technicals suggest more downside
Copyright © 2019 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights:Times Syndication Service
This Delhi investor learnt trading in school of hard knocks, makes it big
TCS confident of growth across LatAm, India, other markets
9 out of top 10 firms add Rs 82,380 crore to m-cap
Exit polls, election result & other factors that may guide D-Street this week
IMFs Lagarde says US-China trade war could be risk for world economic outlook
Dalal Street week ahead: Knee-jerk fall or break-neck rally? Market faces its moment of truth
Chinas tough rhetoric leaves trade talks with US in limbo
Behind gloom of uncertainty, IT offers a lot of promise to capture
Etihad reps exit makes Jet board defunct
Choose your reason below and click on the Report button. This will alert our moderators to take action