A fax machine and printer. That is what Dhirendra Kumar, founder and CEO of Value Research, considers his first ever investment to be. He bought the equipment for Value Research Company, he founded in 1992. Kumar has a venture some approach to investments and so 90% on his portfolio is in equity in the form of shares and mutual funds (MF) and the rest is cash and real estate, International stocks also form a part of his portfolio, through active mutual funds. Kumar revealshis investment details and how he came to found ValueResearchin an Interview.
Take us through your financial Journey from the timeyou started Value Research.
I did not invest in the Initial period. I always had an Idea that I have to invest and I have to save, but I never got an opportunity because I was too busy building Value Research and running a business. You can say that I was fully Invested in equity and that happened to be my company. I remember my first initial investment was buying a fax machine, which was quite an Investment or buying a printer. That was a very sizable Investment of 15,000-18.000 in those days.
At what point did you start Investing?
All my investment was happening in the company, acquiring assets, buying workspace and things like that. But, my initial investment for the first seven- eight years were only tax saving funds and they were quite phenomenal. In fact the foundation of my net worth is built on those investments.
Do you remember which your first ever mutual fund pick was?
In 1990s, there were about eight MF companies, while MF regulations did not exist. And in the final years my exams. I persuaded my parents to move a substantial part of their FD, into a MF which was just getting launched. This fund was Magnum Multiplier Scheme. Launched in August 1990.
Till January 1992, when the great Indian Scam happened, the market was on the fire and went up by two-three times in a span of two years. All the funds were about to end. They were listed in the market. Our money multiplied 16 times in a span of two years.
Were you able to get out in time before the market crashed?
From newspaper clippings. I had made a nice tabulation of the NAV of the respective funds. The price was changing every day, but the NAV was changing every three month with a two-month lag. By tabulating all this information, I had a clear view of market and I was able to persuade my parents to sell. They sold their holdings at 160 per unit. The price went to 190-200 then, but we missed that opportunity. However we were able to get out in time.
Did you get caught up with the Dotcom boom?
Yes I was caught up in it and in quite big way. The first technology fund launched in India was Kothari pioneer InfoTech, and that actually was a block buster. It just went up and up, never stopped and then they followed it up with another fund called Kothari Pioneer Internet Opportunities Fund. The InfoTech scheme was a big multiplier as it went up by 20 times.
At that time l really understood what real diversification is. Because everybody thought that one is diversified by Investing in diversified equity fund and Investing a little bit in technology fund.And then on the side investing in a set of technology stocks. This gave mean idea to launch a portfolio manager tool on Value Research which showed users what you actually owned by cutting through the clutter.
Unlike the Harshad Mehta boom, were you able to get out in time when dotcom bubble burst?
In Harshad mehta boom it was easier to get out simply of it as there was a goal around that.
Can you give me a broad classification of your portfolio; how much it would be in equity, gold and alternatives?
Most of it is in equity and a little bit of them is in cash. Which is lying in my bank account because I am lazy. Some of them are invested in real estate. My initial offices were owned by me personally, and I continue to own this offices. I don’t own any house in Delhi as my home requirements keep changing. I rent a house instead. I live with my parents and my children. I need a large house and the rent is very reasonable compared to the value of the house. However my children are getting older so my house requirements might change again. So 90% of my investment is invested in equity through shares and equity funds. All my incrementally money is flowing into stocks directly today. Other 3-4% would be in cash in my bank account, and the remaining is in the land. My family and I own 100% in Value Research, but it is not counted here.
How have your holdings faced?
My return over all these periods, aggregated, is about 19.78% since 1991-95 and is listed over the last weighted average returns, taking into account all the dividends that I have received from my stock portfolio or the MFs. Actually I have not done any redemption except when I was moving my money from mutual funds to stocks and when we were buying an office.
Would you shift to debt eventually as you near retirement?
There is no such plan. 1-2% of my investment will take care of my needs because my expenses are not so high.
Do you have life and health insurance?
I have carried on with my term insurance which I picked a long time ago. I have a reasonable health insurance cover provided by my company.
Did you shift between equity market segments in the past?
No. Most of my investments are just lying around in MFs. In fact the average life of my investment will be more than 15 years.
How do you identify yourself as an investor?
I have been a very thoughtful investor. And I would like to be focused now. I wouldn’t like to be focused now. I would be willing to take some concentrated bets. My only aspiration now, because I did not have time before, is that I find my great 5-7-10 stocks which I can hold for the next 10-15 years.
Do you have any realization for your lifestyle in this pandemic?
I have suddenly realized that there is a life beyond work. Also, I started thinking that one should have a home that is not in a big city.
Courtesy,
Neil Borate, Mint Publication