FOLLOW THE PACK?

Today morning, BEML rose to a 10-month high on the NSE on news that ace investor, Porinju Veliath had bought some 2.65 lakh shares in the company.

A couple of months ago, ADF Foods stock price literally went into a frenzy after another “ace investor” Ashish Kacholia bought shares in the company.

Ashish Kacholia, not as famous as Porinju or Dolly Khanna, he is nevertheless known for his great buys, especially in the mid and small caps. NIIT, Birlasoft, Majesco, KPIT Technologies, Mastek, Shaily Engineering Plastics, Apollo Pipes, Poly Medicure, Paushak, Hikal, and HLE Glasscoat are some of his favourites.

Earlier, it used to be only about Rakesh Jhunjuhnwala and Damani. And today, apart from Porinju and Kacholia, news of other investors like Vijay Kedia, Dolly Khanna buying also moves the stocks.

As per data put out by Bloomberg recently, in Q2FY21, Jhunjhunwala bought stakes in V A Tech Wabag, Prakash Pipes, Tata Motors, NCC, Agro Tech Foods, Jubilant Life Sciences, TV 18 Broadcast, Lupin. On the other hand, he reduced holdings in Escorts, Federal Bank, Autoline Inds and Titan.

Another ace investor, with the ‘Midas Touch’ the owner of D Mart, Radhakishan Damani hiked stake during Q2 in only one company – Spencer Retail.

Ashish Kacholia bought stakes in Mold-Tek Packaging, Mastek, Neuland Lab, Marksans Pharma, ADF Foods and Astec Lifesciences. He also hiked hi stake in Beta Drugs, Religare Enterprises, DFM Foods, Safari Industries and Apollo TriCoat. And he exited from KPIT Tech.

Vijay Kedia bought stakes in Affordable Robotics, Repro India and Ramco Systems. He pared stake in Lykis, Sudarshan Chemicals and Vaibhav Global.

Rajiv Khanna, who invests in the name of his wife, Dolly Khanna, in Q2, hiked stake in KCP, Heritage Foods and Rain Inds. He sold part of his stake in Nocil.

So should we follow these guys? There is no doubt that they buy stocks after a lot of research; it is rarely an impulsive buy as they put huge amounts of money. But remember, they get the shares before we even know about it and by the time, the bulk deal is announced, the price is high, leaving very little for us on the table.

What this means is that when these big guys buy, just on the momentum, the price rises but it is not that the price rise is always sustained just because they have a stake. Thus as a trader you could probably make some “news based” money but buying for long term just because they have a stake, makes no sense at all.

What we have to learn here is that like every individual is different, his investment needs and strategies should also necessarily be different. What works for Damani or Jhunjhunwala need not work for you. They are like a lion on the prowl in the jungle; when they move, the entire jungle knows but can a monkey eat the lion’s hunt; it is only the hyena or the vulture, both scavengers who eat the leftovers after the lion has eaten. Is it a good idea to be a scavenger? Best to be a hunter but one can take lessons from the best. The basic purpose, to eat, is the same but methods and requirements are different. That’s the same logic when it comes to following these legends or Warren Buffett. You can take lessons from the king of the investing jungle but it defeats his teachings if you only follow him blindly.

Remember, Jhunjhunwala and Damani made millions by staying invested for a long term. They are not day traders. And that is probably something we all should follow them blindly for. Invest wisely using your own mind and intellect and maybe, you could emerge as the new Jhunjhunwala, Damani or even the Buffett of India.