The Stock Picks & Words Of Wisdom Of Six Ace Stock Pickers

Well, that did happen – 12 years ago – on 2nd April 2002.

I stumbled across a transcript of a conference organized by capitalideasonline.com (run by ace stock whiz Chetan Parikh) at ISB, Hyderabad.

The unique feature of the conference was that the said six ace stock pickers were rated on the performance of the stock picks that they had given at an earlier conference. Also, each one of the wizards was required to give new stock picks and also give a detailed justification for each.

Rakesh Jhunjhunwala had even then earned the nickname “LOTBM” (Leader Of The Bull Market) for being uncannily right in predicting the start of the Bull market.

Rakesh started out by stating that he has “lot of stocks to recommend”. He recommended CRISIL on the basis that it’s “external opportunity, competitive ability, ability to scale-up and operating leverage” were “outstanding”. He explained that over the next 5 year’s CRISIL’s rating business will grow at 40-50 percent and that because it has huge operating leverage, 60 percent of the additional revenue would be profits. He also recommended Titan on the basis that it has “great brands”, “great distribution” and that its valuation (then Rs.62 pre split) is “a joke”

(Image credit: capitalideasonline.com)

Bharat Shah recommended Dr. Reddy’s Labs on the basis that it would do well “for several years to come”. He pointed out that Dr. Reddy’s is “an incredibly strong pharmaceutical business” and that it is “one of the strongest examples of smart individuals who are focusing on their future”. He gave several excellent reasons why Dr. Reddy’s was an excellent pick at that time.

Each of the other stock wizards recommended several other stocks. Several of those stocks are super-duper multi-baggers today.

There was also a lot of wisdom that the wizards shared with the audience.

Raamdeo Agrawal was keen on his wealth creation studies even then. He pointed out that his studies have shown that companies which are wealth creators have three things in common: (a) earnings are growing at 25% plus, (b) the ROE is at 25% plus, (c) the stock is purchased at reasonable valuations. “If you methodically observe all of the three rules, you will consistently make money” Raamdeo assured the audience.

Sanjoy Bhattacharyya also shared his wisdom with the crowd. He made the point that successful wealth-creating companies are those which are “highly focused”.

Sanjoy also came down heavily on investors who seek to time the market. “You can’t be a timer and hope to make serious money in your life” he said.

Sanjoy also made the excellent point that “investing is really about controlling fear and greed, discipline, patience and clarity of purpose”. He emphasized that each of us has to be clear on the objectives and match our ability to take risks to what we want to achieve. He also pointed out that he is “pathologically risk averse” and that he only buys stocks which have very few risks associated to them and which have “durability/ predictability” of earnings.

The entire transcript is worth reading because nothing has at all changed in the 12 years that have passed. What the wizards advised then is equally relevant today.