Rakesh Jhunjhunwala's fortunes bounce back, portfolio up 15% in Dec quarter

The gain comes after decline in the previous three quarters of 2018

Rakesh Jhunjhunwala, known as India’s Warren Buffet, has seen his fortunes bounce back after the value of his disclosed portfolio eroded for three quarters in a row.

It had fallen from Rs 14,133 crore at the end of December 2017 to Rs 10,777 crore at the end of September 2018. The disclosed value of his portfolio was up 15.2 per cent to Rs 12,416 crore during the December quarter. The Sensex was down 0.44 per cent during the same period. 

This performance looks at his publicly disclosed stake that is over 1 per cent.

The analysis is based on 11 different names that Business Standard identified as belonging to Jhunjhunwala. This included his name, the name of a related firm, his spouse and various combinations of the same. Some changes in the portfolio’s value can also be on account of an increase or decrease in stake during the quarter in companies where such stake requires public disclosure; this is because of the performance of the stocks themselves. However, taken on an aggregate, it can be considered broadly indicative of how his picks have been doing in recent times.  

He has a stake of over 1 per cent in 31 firms. Stakes remained unchanged in 17 of them. The value of these 17 stocks has gone up 11.7 per cent during the quarter, which would suggest he has had a good quarter on existing investments, too. 

He has increased his stake in five out of the remaining 15 stocks. He decreased stake in the remaining 10. This includes Dewan Housing Finance Corporation (down from 3.19 per cent to 2.46 per cent), Fortis Healthcare (down from 2.41 per cent to 1.66 per cent), and TV18 Broadcast (down from 2.97 per cent to 2.6 per cent). 

Only two companies where he has increased stake are large-caps. A large-cap stock is one that is on the top 100 listed stocks in terms of average market capitalisation. Six were mid-caps (between top 100 and 250) in terms of market capitalisation. The rest were all small-cap stocks, which are below the top 250 shares. Twenty-three of the 31 stocks in his publicly disclosed portfolio consist of small-cap stocks. 

This shows the varied time period taken to liquidate the position of a firm in his portfolio.

Back-of-the-envelope calculations show that Jhunjhunwala would take a median of 7.8 days (minimum) to liquidate a given stock in his portfolio. 

This would depend on size of the holding and liquidity of the counter. In this case, it is based on the average number of shares traded for a given counter over the 12 months ending December. 

 

Since there would be other buyers and sellers in the market, the time taken to liquidate his position in a stock is likely to take longer than the minimum amount mentioned. 

The difference in the time taken for liquidation of his portfolio varies widely – from less than a day’s trade to a holding period of 196 days. 

 

A sectoral analysis reveals that consumption still accounts for the majority of his portfolio, thanks largely to his Rs 5,845 crore bet on Titan. There has been an increase in allocation of non-banking financial companies, despite the volatility associated with them. The segment has been grappling with liquidity problems following a default by Infrastructure Leasing & Financial Services (IL&FS) towards the latter part of 2018. 

The rise in his allocation to the financial sector is largely because of bets on rating agency Crisil and south-based lender Federal Bank. He has cut his stake in Dewan Housing Finance Corporation also. 

Jhunjhunwala did not reply to an email requesting comment.