Meet the Market Masters – Govind Parikh

The Chennai chapter of the CFA Society India kicked off the year with a session with Mr Govind Parikh, a seasoned investor that has created wealth over multiple decades, who was interviewed by Mr Naresh Katariya, a full time value investor.

The session started with an interesting question on “what gave him the conviction to deploy cash during CoVid crisis? and the answer was simple – we had cash to deploy!.

In a market filled with narrative of “time is more important than timing”, he seemed different! He dwelt on how everytime was different and that how the crash of 2008 (when they did not have cash) made them improvise to take cash calls.

In a wide ranging conversation, Naresh travelled back in time with Govindbhai, taking us thro his journey of investing, a journey that started 45 years ago as a final year Chemical engineering student, who found the chemistry of markets to be his true calling!

He vividly recollected how a meeting in Mumbai with Kisanbhai Choksey (KR Choksey) set him on a path of understanding businesses, balance sheets and equities and at a different point in the conversation he mentioned about how Kisanbhai has maintained his habit of reading and research although he is much older now!

Keep it simple

Naresh moved the conversation to the secret sauce –investment philosophy and process! Mr Govind’s thinking and articulation was simple – quality managements with a passion for their enterprise that take care of their business stakeholders (vendors, employees and customers) will reward minority shareholders.

Thinking again – is it so simple as Govindbhai makes it out to be!

Considering that he has been an investor for over 4 decades he has had multiple multi bagger investments, something everyone aspires to have and he had the following to say

“Nobody knows it would be a multi-bagger at the time of investing” and

“If the promoter knows his company is a multibagger, he will never do an IPO”

Invest in companies with promising growth and add more when stock falls while fundamentals remain positive – eventually you will have a few multibaggers. And to know that the fundamentals remain intact, continue your research of the company!

Another simplistic statement!

On Porfolio Constrution & Selling out

Typically do not have more than 10% on a single stock, with 30 stocks accounting for 90% of the portfolio.

Selling out is not easy and it’s a difficult decision to make. We try to remain disciplined on selling, although most of the stocks have rallied considerably after exit, but never regretted the decision. For Naresh, the curious interviewer this demonstrates the ability of an investor to identify quality businesses!

I have a wall of Shame

The conversation was candid when Naresh broached the issue of mistakes.

Its fine to have a mistake or few, but you cannot have blunders – its essential to avoid blunders to prevent deep drawdowns and its important to learn from your mistake.

Mistakes can be anything – even not finding out the reason for someone’s decision can be a mistake and he dwelt upon an encounter with an underwriter of a tech IPO in 90s, who felt happy when the issue bombed and how the failure of the issue made Govindbhai not to participate in the IPO – wish I had asked him the reason for his happiness!

He narrated another event of selling a stock that had rallied too fast and how our mind tries to find a reason (that may not exist) to sell stocks that move fast!

Does size matter?

As his portfolio has grown, his perspective on investing has changed. From looking for higher returns, he has shifted to looking for safety at the cost of returns and the need to retain cash – a principle he calls as “bear market buying power”!

Advice to budding investors

There are no shortcuts to wealth creation, be humble and learn actively! Maintain a journal of your investments and evaluate yourselves.

Do not miss the video (as and when its released) as the conversation was sprinkled with a lot of anecdotes from the past!