Basant Maheshwari’s USP is his never-say-die spirit. We saw how in the midst of the great stock market crash of 2008, Basant clawed his way back from imminent bankruptcy to reinvent his investing formula.
Basant freely shared his investment formula and stock tips to an eager audience and also penned a book called “The Thoughtful Investor”. This propelled him to great heights and made him very popular amongst investors.
Basant cleverly cashed in on his popularity by starting a stock advisory service called “Basant Top 10”. This was a roaring success.
However, a couple of bad strategic decisions by Basant coupled with the failure of a few stock picks led to such a firestorm of protest that Basant abruptly shut down his service.
All of that is in the past. For the future, Basant is looking forward to his brand new portfolio management service.
Basant’s strategy is a brilliant one because a PMS is known to be a money-spinner for the portfolio manager as well as its clients.
A typical PMS requires a minimum investment of Rs. 25 lakh. The fees are a flat 2% plus a share of 20% of the excess over the hurdle rate which is normally pegged at 12%.
This means that if Basant attracts 100 clients, each putting in Rs. 25 lakh, and generates a CAGR of 25%, he stands to pocket 1.15 crore as his fee.
If the AUM surges to Rs. 500 crore and generates a return of 33%, Basant’s take-home pay swells to a mind-boggling Rs. 31 crore per year.
There are a number of role models that Basant can look to for inspiration.
Porinju Veliyath’s PMS, Equity Intelligence, has an AUM of Rs. 350 crore and is clocking in a return of 33%. Other savvy investors who are running portfolio services include Prof Sanjay Bakshi of ValueQuest India Moat Fund, Nilesh Shah of Envision Capital, Manish Bhandari of Vallum Capital, Ravi Dharamshi Of ValueQuest etc.
The important point to note is that the PMS concept in India is still at infancy. In the USA, portfolio management services (called hedge funds) manage billions of dollars. Bill Ackman’s Pershing Square, for instance, manages a mind-boggling AUM of $20 Billion (Rs. 1,35,000 crore). Even Nehal Chopra (a former Mumbaite), who is still in her early thirties, manages nearly Rs. 6,500 crore in her Tiger Ratan Fund. The portfolio managers like Carl Icahn, Bill Ackman, David Tepper etc are billionaires in their own right.
It will be interesting to see who amongst the PMS Managers in India will be the first to reach the same exalted status that their foreign counterparts enjoy!