One quality about Porinju that requires appreciation is the openness with which he talks of the stocks held by Equity Intelligence, his PMS.
This attitude of Porinju is salutary and in sharp contrast with the approach of other PMS providers who go out of their way to keep their holdings a top secret out of fear that potential clients may simply clone the holdings by themselves instead of joining the PMS.
The astonishing part is that despite the candour by Porinju, the AUM of the PMS has surged to Rs. 392 crore in FY 2015-16 as compared to Rs. 220 crore in FY 2014-15. This represents a steep increase of 78% in the AUM. If you compare it with the AUM of FY 2013-14, the increase is a mind-boggling 312%. It is also commendable that there has also been a quantum jump in the number of clients who are willing to trust Porinju with their hard-earned money.
| Clients | No. of Clients |
Funds Managed (Rs. Cr.) |
Discretionary/Non Discretionary |
| As on 31.03.2014 | 367 | 95.00 | Discretionary |
| As on 31.03.2015 | 460 | 220.01 | Discretionary |
| As on 31.03.2016 | 782 | 391.90 | Discretionary |
Sadly, the steep increase in the AUM has led to a steep decrease in the returns from the PMS.
| Particulars | 2015-16 | 2014-15 | 2013-14 | Since Inception (*) |
| PMS Return | 11.42% | 71.69% | 57.03% | 32.24% |
| NIFTY | -8.85% | 26.66% | 17.81% | 17.23% |
| BSE 500 | -7.80% | 33.19% | 16.93% | 18.89% |
In FY 2015-16, the PMS gave a return of 11.42% which compares poorly to the massive return of 71.69% in FY 2014-15 and 57.03% in FY 2013-14.
While the return of 11.42% outperforms the Nifty and BSE 500, it underperforms the return of 26.7% generated by the PMS of Manish Bhandari’s Vallum Capital in the same period.
Alpha Invesco, a reputed stock advisory service, generated a return of 10.2% in FY 2015-16 which its founders described as “below expectations”.
Let’s take a quick look at some of the stocks held by the Equity Intelligence PMS:
| Stock | CMP (Rs) | Returns In FY 2015-16 | YoY Retuns |
| Atlas Cycles | 192 | (7) | (7) |
| Anant Raj | 47 | (18) | 24 |
| Ansal Buildwell | 75 | 12 | (14) |
| Biocon | 710 | 10 | 51 |
| Eastern Treads | 145 | 92 | 175 |
| FCEL | 22 | 67 | 69 |
| Force Motors | 2913 | 102 | 90 |
| Hind Industries | 14 | (42) | (31) |
| Godrej Properties | 328 | 17 | 33 |
| Gokaldas | 110 | 47 | 98 |
| HSIL | 276 | (38) | (20) |
| Indian Hotels | 130 | (13) | 38 |
| Kerala Ayurveda | 63 | 40 | 75 |
| NIIT | 80 | 54 | 90 |
| Selan Exploration | 200 | (26) | (37) |
| Tata Global | 124 | (18) | (7) |
| Transport Corporation | 304 | 12 | 28 |
| Zicom | 43 | (50) | (72) |
Prima facie, there are two reasons for the sharp drop in returns from the PMS.
Contrarian stock picks which have not worked:
Porinju has invested heavily in contrarian stock picks like Selan Exploration and TGBL.
26% of our PMS is Selan Exploration! Stick on with conviction ideas; you may need patience, of course…
— Porinju Veliyath (@porinju) February 3, 2014
It may be recalled that Porinju has stayed defiant about the prospects of crude oil and has persisted with the huge holdings in Selan despite warnings from Goldman Sachs and Rakesh Jhunjhunwala that the future is very bearish for crude oil. It is notable that other ace stock pickers like Dolly Khanna exited Selan Exploration in the nick of time.
Porinju has also stayed defiant about Tata Global Beverages. I pointed out in an earlier piece that Porinju has been bullish about Tata Global since 2010 though the stock has delivered paltry returns since then.
TGBL @ 107, can create huge shareholder wealth if smarter guys run the company. We hold. @TataCompanies @RNTata2000 https://t.co/4JK4nH1QCB
— Porinju Veliyath (@porinju) February 20, 2016
Huge influx of funds has lead to “winner’s curse”:
The second reason for the muted show may be the fact that there has been a huge influx of Rs. 172 crore into the PMS in FY 2015-16. Porinju may or may not have had the opportunity to deploy all the funds in a meaningful manner. Also, the stocks that he bought in that period will obviously take time to mature and give returns.
This paradoxical phenomenon, where initial success leads to a huge influx of funds, which then leads to a deterioration in performance, is popularly known as the “Winner’s Curse”.
Penchant for ultra-micro-cap stocks with dubious management pedigree has compounded the problem:
The problem is compounded by the fact that Porinju has a penchant for micro and ultra micro-cap stocks with low liquidity. For example, Hind Industries, one of the worthies in Equity Intelligence’s portfolio (5,80,199 shares as of 31st March 2016), has a market capitalisation of only 11.70 crore and an average daily trading volume of only 1000 shares. It is obvious that one cannot neither enter nor exit such stocks except after causing violent price damage.
Atlas Cycle, Kerala Ayurveda, Ansal Buildwell & Zicom, ultra micro-caps with market capitalisation of Rs. 62 crore, Rs. 66 crore, 55 crore and 97 crore respectively, are other examples of this.
Porinju also stays defiant towards concerns regarding management quality. One can see from the tweet of 17th October 2014 that Porinju recommended Zicom despite warning of “management concern“. The stock has lost 60% since then and 72% on a YoY basis.
Zicom @ 105 | mktCap 185 Cr, Revenue 926 Cr, NP 45Cr, Net debt 375 Cr, futuristic business, worth exploring, despite management concern
— Porinju Veliyath (@porinju) October 17, 2014
In reply to a query as to how one could invest in stocks with low promoter holding and high pledging, Porinju explained that one should buy a basket of such stocks and hope that the winners will outnumber the losers.
@sanjeevnayini don't ignore; consider everything & apply common sense. when u pick 10 such potential multi baggers, 2 or 3 could fail..
— Porinju Veliyath (@porinju) October 18, 2014
The “winner’s curse” also afflicted Prashant Jain, the ace stock picker from HDFC MF. His funds have grown to such a mammoth size owing to his success in stock picking that it is now very difficult for him to find attractive opportunities to deploy the money. He is constrained to buy large-cap stocks where the returns are muted.
It will be interesting to see how Porinju deals with the issue and whether he will continue to delight his subscribers with superior returns in the future as well!
The micro cap stocks you mentioned are held in Equity Intelligence proprietary account, not by clients in PMS I think
CAVEAT EMPTOR …y have u forgotten Om metals and others…which he first buy in family name and then buy in a fund … A FUND cannot be successful in the long run if the research team or HEAD will take personal positions with cash elements as per market buzz. A trading in a personnel portfolio and investment in FUND never be successful..SEBI must be looking this case also …Plus lot of guys register just to learn what he is doing on weekly basis and do trading in those stocks …Don’t be impressed by the number of investors registered..
i totally agree…Porinju or any body cannot SAIL against the winds if they don’t have clear intentions. check his records in 2013 when markets were down or chech the record next year. In a bull run anat body can make money. The biggest challenge is to do wealth creation which is not possible for people with bad intents. If the information or research is first used for PERSONAL trading, a FUND cannot give great results.
@Rani it look like u got mixed up thing in you rmind, porinju is never a log term investor he him self admit that he is an opportunist how find companies at so called inflection point !
He is ONLY dependent on his common sense and he do nothing more than that !!
one dont need top IQ to know what he does “sell on return or it will remain till return” 🙂
By the way paste performance is not guarantee for future returns
It’s not winner’s curse. May be i would call as “Blind” followers finally woke up. Don’t know why you guys give so much importance for an operator.
Just because HSIL, TGBL, Selan gave negative returns he tweeted these names very often to trap his blind followers but they didn’t fall prey. I am not sure whether this list is a complete one since i remember he mentioned he exited Force last July at 3000 per share. Also i remember he tweeting about RPG life science, Jubilant Industries, Arvind Infra etc…
And if you see the returns he generated in 2013-14 & 2014-15 clearly indicates that he made those figures because of the market level euphoria in those 3 years. Market is facing the reality only after August 2015.
Hello Arjun, I am part of Equity Intelligence. Our PMS never invested in the so called Atlas Cycle, Ansal Buildwell, Eastern Treads, Hind Industries & Kerala Ayurveda; you seems to be mixing up the PMS holdings with his proprietary trades and few very old failed investments! PMS holdings are in individual names, which are unlikely to be in Top Shareholders of respective companies. Bulk deals, if they are under PMS will show “Equity Intelligence India Pvt Limited – PMS”.
PMS is not a mutual fund, stocks are bought under the client’s account. Hence won’t show up in bulk deals. It’s not the same portfolio for all clients.
Fortunately I left from Pms of equity intelligence
and now I am doing my own .
Hi!! Can you elaborate more how was your experience with equity Intelligence PMS?
Could you please elaborate more about your experience with Equity intelligence PMS?
Thanks
Azhagu
Hi Anil,
Can I have your details and experience why you left PMS and any reasons in particular, since I am also a part of his PMS and in there since last 6 months
Hi Rishabh,
how is your experience so far with equity intel pms?
please let me know.
There are good mid , small, micro cap funds . Why PMS ?
Dear Sanjai,
Could you please advise the best mid/small/microcap funds for long term investment? Thanks in advance.
I invested in the following
DSP Blackrock micro cap. DSP Black rock small and mid cap fund, Franklin India smaller companies fund, Mirae asset emerging blue chip fund, Reliance small cap fund.
Many Thanks Sanjai
A very insightful article about Porinju’s PMS. However conclusions drawn upon are premature at best and based largely on assumptions (for instance the mix up of the stocks in pms and proprietary trades mentioned in previous comments). IMHO, one year is too short a time to analyse the impact of longterm value investing, even in the year of analysis Equity Intelligence has given an alpha of 20%+ which is a great achievement in itself. Hightlight to me is the since inception CAGR, it is mind blowing – 32.2% means 30 times of invested capital in 12 years, it is just amazing!!
If you find these returns mind blowing, you should check Prudent Equity and talk to advisor running it. Let me tell you that CAGR of Prudent Equity since inception is almost double of CAGR of this PMS. Even the minimum return that he expects per annum is more than this PMS CAGR. People should not invest in PMS— Very limited information, no comparison of different PMS, High Cost. Further the PMS returns of every client are different. The PMS returns posted above are not for all clients. Some may have even worse returns. These may be even the best return of a particular client. Who knows. No PMS declares any such data. Why to invest in such a product for which you don’t have enough data. Check out Prudent Equity and decide for your own.
Do we have any tangible evidence for performance of recommendations by Prudent Equity? Looks like theirs is an investment advisory service, recommending stocks and actually executing them in a portfolio are two different things. 32% in hand any day is better than 50% in paper.
That is why I mentioned to call the advisor. I am a subscriber and have evidence of the past performance. PE recommends stocks and we execute them in our personal portfolio. In reality, the returns given on the website are on conservative basis. Personal portfolio returns are much higher. Unfortunately the truth is that no PMS wants to disclose their correct information. Again, who knows that this 32 % may be the CAGR of his best PMS client return who may have started PMS in recession times. PMS will never declare true facts. It all looks good on paper. I am sure there will be clients getting much less than CAGR of 32 %. Why don’t you call the advisor and then decide. Why to rely on my facts. Let the advisor give you true facts. His number is there on the website.
hi mohit,
can you share your details mob no. or email id where we can interact , i am an investor and considering PE but need some feedback on it.
I am invested in pms and my returns are negative and negative and down by 10% for mar 16
Please share your contact no. or email id. I will connect with you.
Hi Mohit,
My email id is djrish@gmail.com and contact no. 9819861049
ups and downs are part of market and so maybe with eq intelligence performance, however i am invested and happy to continue with them 😉
At the start of bull run Quality Stocks perform but after that in second stage it is turn of midcap and along with that third class stocks start running.In third stage only qualty which keep on moving and third rate stock start stagnating.And now we are in fourth stage.Market become skewed,only quality keep on moving,third class stocks start correcting and money from them start shifting to Qualty.Now on we shall see huge underperformance from those who are alergic to Quality.My advice to fellow investers is that focus on top 200 stocks ,excluding PSU,commodity,utilty,metals,airlines from that .For investing in small and mid cap ,invest in small and mid cap mutual funds.
#Niveza #Review ::
This is actually unfair to expect all stocks to deliver better. Few can go wrong as well, but yeah one should move with some vision that what could be the stoploss for a particular stock. I mean where one can add more or exit out, it is equally important. During FY 2013-2015, PMS has delivered mind boggling returns comparing with the Nifty and the Sensex. Out of the list, majority were better placed with fundamentals and few were having better potential to deliver with aggressive plans.
Source: http://goo.gl/qU5AyN
Which advisory/PMS did not give your so called mind boggling returns in CY 2014. It was a bull run phase and almost everyone delivered good returns. To all readers, the PMS returns posted above in FY 2014-15 are less than that delivered by PE in CY 2014. Why is this PMS so worthy ??
It happens with everyone when someone performs well, people jump in with money. AUM increases, sudden increase in AUM becomes difficult to invest and returns decline.
aspinwell and flex foods is going to be rock this year …. east or west porinji is best
I WISH TO KNOW ABOUT MODERN SHARES AND STOCK BROKERS LIMITED, INFORMED CIRCLES ARE ACCUMULATING IT PRICE 14, BV 42, DIVIDEND PAYING , DEBT FREE, STRONG PROMOTER HOLDING 75 %
From my point of view the most important thing which Porinju Veliyath does is he goes for profit making companies, including those ones too which have recently converted from loss to profit. But he mostly buys the share when it has almost halved from its highest peak considering a 2-3 years period. In most of his selected companies, promoters holding is above 50%. That’s good strategy.
However, noticed that he is not bothered about the ROE & RONW % and whether the company is having debt and whether it is a dividend paying company. According to me this is the most crucial point where one should be very much careful while selecting a share.
“”One quality about Porinju that requires appreciation is the openness with which he talks of the stocks held by Equity Intelligence, his PMS. This attitude of Porinju is salutary and in sharp contrast with the approach of other PMS providers who go out of their way to keep their holdings a top secret out of fear that potential clients may simply clone the holdings by themselves instead of joining the PMS. “” By doing so, Porinju is very smart because as it is, he will be holding many shares of his recommended company. Besides outsiders/others who are not in his PMS too will start purchasing those shares, which will result in further appreciation in price of those shares. This is the time when he will start unloading/selling his portfolio/PMS portfolio in those shares.