Ashish Dhawan ChrysCapital Portfolio Of Flop Stocks

Ashish Dhawan of ChrysCapital has a portfolio worth in excess of Rs. 265 crores. He made money early in his career by being the early investor in stocks like Axis Bank (then UTI Bank), Yes Bank and Shriram Transport Finance and Mphasis which became super-duper multibaggers and made him a lot of money.

A study of the present portfolio reveals that there are no top-quality names there. Instead, Ashish Dhawan appears to have preferred to invest in what were then supposed to be “promising” stocks but which have gone nowhere. Sasken is a good example of this where Ashish Dhawan has invested Rs. 28 crores. Sasken was touted as the leader of the telecom software revolution and expected to be a multibagger several times over. It attracted investment from top-notch investors like Goldman Sachs, Citigroup, Nortel Networks & Asit C. Mehta. However, the stock has been a huge disappointment giving negative returns over several years. The only reason it is tolerated is because of high dividend yield of 5% +.

Orient Green Power, in which Ashish Dhawan holds 21.85 crores of stock, is another example of a stock that has been a total disappointment. Over the several years, the stock has just given negative returns.

Mastek, in which Ashish Dhawan’s present holding is worth Rs. 30 crores, is a third example of a worthless stock that has gone nowhere but down in the dumps.

Ashish Dhawan bought Allsec Technologies in November 2007 at the price of Rs. 125, resulting in a loss of 74% of his capital. In Four Soft also, Ashish Dhawan would have suffered a loss because that company has gone only way and that is down.

Ashish Dhawan has also been selling a lot of worthless stocks. He sold 108213 shares of Welspun Global Brands at Rs. 36.34 (market price is Rs. 43.40) & 77500 shares of Welspun Investments and Commercials at Rs. 20 per share.

In Kajaria Ceramics, Ashish Dhawan made a bit of money. He bought 10,25,199 shares in September 2010 at the price of Rs. 71 each and sold off the entire holding in May 2012 at Rs. 158, netting a cool profit of Rs. 8.91 crores (122%) in just 18 months. However, if Ashish Dhavan had waited a bit more, he would have got Rs. 217 per share, taking his overall profits to about Rs. 15 crores. This means Ashish Dhavan lost out on 6 crores of profit. Of course, it is easier to be wiser after the event!

The other surprising thing is that while Ashish Dhawan has sold off all of his winning stocks (Yes Bank, Axis Bank, Shriram Transport and even Kajaria Ceramics), he has held on to the trash stocks like Sasken, Mastex, Four Soft etc even though the losses havw continued to mount. It is almost as if he had an “aversion to book losses“. This behaviour also goes against the conventional wisdom of “Water the flowers & cut the weeds” (ride the winners while dumping the non-performers).

In hind sight, Ashish Dhawan would have been much better off if he had gone the Rakesh Jhunjhunwala route and invested in top quality names like HDFC Bank, Titan Industries & Page Industries. His portfolio would have been several times larger now if he had done that.

The take-home point is that all of us investors also make the same mistake. I, myself, invested large sums in rubbish stocks like Ankur Drugs, Ganesh Ecosphere, IVRCL Infra and many others in the hope that they would become “multibaggers”. That never happened and the stocks lost huge value. If I would have had invested the same money in top quality stocks, I would indeed have had my multibaggers. A lesson learnt, though a costly one.