Monday, March 11, 2013

Big bull Jhunjhunwala losing his magic touch

Is Rakesh Jhunjhunwala, India’s most followed stock investor, losing his magic touch? It seems so going by the performance of some of his most recent investments. Jhunjhunwala’s recent market bets from Pipavav Defense and Offshore Engineering (earlier Pipavav Shipyard) to DB Realty, Sterling Holidays and Resorts to A2Z Maintenance (bought from the secondary market immediately after IPO) are either quoting lower or at similar levels since he invested in them about two years ago, an analysis by Financial Chronicle revealed.Jhunjhunwala, popular in market circles as ‘Warren Buffet of India’ for his long-term investment approach, may still have the last laugh after a few years if the stocks zoom as in the case of his other famous investments such as Titan, Crisil, Geojit and others, said stockbrokers.However, for now, RJ’s reputation built over the years is under a serious threat.DB Realty, where he bought 12.50 lakh shares at an average price of Rs 90.21 apiece in October last year, is now trading at Rs 79.75, causing Jhunjhunwala Rs 1.3 crore loss as of Monday. 

Similarly, the big bull is nursing his wounds in Pipavav Defense and Offshore Engineering, owned by SKIL Infrastructure, in which he invested in September 2011. The Rs 81.90 crore investment in Pipavav Defense and Offshore Engineering was made in convertible shares issued at that time for Rs 78 apiece. The conversion, due in 18 months, falls in the coming weeks.

Shares of Pipavav Defense and Offshore closed at Rs 67.10 apiece on Monday, a loss of nearly Rs 11 a share for the billionaire, who was ranked #46 richest Indian by Forbes.Similarly, Jhunjhunwala’s move to garner investor faith by buying over 16 lakh shares in A2Z Maintenance, a company he backed, on the day of the company’s listing on the stock exchanges has backfired. Though the exact price he paid to buy these shares is not known, the stock closed at Rs 333 apiece on the listing day compared with the IPO price of Rs 400.The share hit a new low of Rs 26.40 on Monday, wiping off at least Rs 50 crore from his secondary market investment. 

An email sent to Jhunjhunwala and Utpal Sheth, CEO of Rare Enterprises, the investment firm founded by the former, elicited no response.Vijay Kedia, director of Kedia Securities, who himself models his investments on Jhunjhunwala, says the ups and downs are part and parcel of the market. “We need to understand that the market is supreme,” he said, but added that “Jhunjhunwala is Jhunjhunwala. He is not running a 100-metre or 400-metre race. He is in a marathon. He’ll stay invested for five years or 10 years.”Kedia felt the recent crash in mid-cap stocks dented investor confidence and this may have impacted Jhunjhunwala-owned stocks as well. Perhaps, only the saving grace is that Jhunjhunwala’s investment in Sterling Holidays and Resorts, where he invested at Rs 75 a share in September 2011, has gone up by a paltry Rs 5, or over 6 per cent, over the past 18 months. The stock is trading at Rs 80 a share. The letdown for investors in A2Z Maintenance, which went public in December 2010 showing Jhunjhunwala’s backing as he continued to hold nearly 20 per cent, has forced the postponement of IPOs of several other firms that he backed.During the road shows for A2Z Maintenance, the 52-year-old investor promised that at least six companies that he backed would be listed in the coming years. Some of the unlisted firms that he has invested in include Topsgroup, John Energy, Hungama Digital and Concord Biotech.
                 This article is taken from My express my sincere thanks to this reporter  Rajesh Abraham