Masterclass with Super Investors
Vijay Kedia is a perfect example of how stock markets can change the fortune of people who are not ready to give up and have a long-term vision. From the days when he was required to sell his mother’s jewels to save himself from bankruptcy to having a net worth upwards of 600 crores, Vijay has come a long way. He has a unique style of picking up stocks and investing in them with conviction. Three of his stocks have appreciated 100 times in the past 10 years (as of 2017). Although he had no major education background, he has been a prominent motivational speaker at all the top IIMs, even the London School of Business.
His early life:
Vijay was born in Kolkata in a family of stock brokers. Therefore, he was not new to stock markets and it ran in his genes. His father was a trader, but passed away when Vijay was just 14. Vijay was close to his grandfather, who used to take him to the Calcutta Stock Exchange even when he was just in school. His interest in stocks led him to be a member of the stock exchange at the age of 18 (official requirement was 21) and he was the youngest in the group.
Since the start of his career, he has liked to take big positions and a lot of risks in the market. He recalls buying 5 Lakh shares of Hindustan Motors when he was just 22-23 years old. However, his risk taking backfired when he lost a lot during a market downturn. The extent was such that his mother even had to stake her jewelry. However,
Vijay recalls that he prayed to God that he would “leave the stock markets” if he could be saved just this time and save his mother’s jewellery . Fortunately, the markets turned and he was able to square off the position at a minimal loss. He left the stock markets for a few days as promised but could not resist and came back to the markets. However, this time he had a proper plan and risk management tactics. He states that the first rule for him in the stock markets is to survive, and the second is to make money.
His investment journey:
By the year 1989, Vijay had shifted to Mumbai. It was a risky decision as he was yet to make a breakthrough in the stock markets. However, he believed that “it was better to die in an ocean than swim in a river”.
In 1988, Vijay, after reading a few industry reports, picked up that the tractor industry was going to do well. This made him invest in Punjab Tractor. He had just 35000 that time, but he invested the entire amount in that one stock. The stock went to 5-7x and he calls this his first investment success.
The next breakthrough was ACC. He bought the stock at a price of 300 and sold it at 3,000. This got him his first house in Mumbai.
His other multi baggers were Aegis Logistics, Cera Sanitaryware, Atul Auto.
Lessons from Vijay Kedia’s Investment Journey:
- In the stock market, you should know what to learn, unlearn and relearn.
- If management thinks he has made a lot of money, their hunger goes away. This is a time to exit the stock.
- In India, management is more important than business.
- One should identify a fish in the ocean, rather than a crocodile in a pond. This means that they look for trending sectors which have huge growth potential and invest in the leader. This will make the most money.
- Try to repeat success patterns rather than keep doing new things.
- While selecting management, look for honesty, hunger and smartness.
- The regret of not buying is higher than buying at a higher price.
- His investment mantra is - SMILE: Small in Size, Medium in experience, Large in aspirations and Extra Large in market potential.
- In the stock market, it is always better to have a second income source. Vijay earns through real estate rental income as well.
- Focus on companies that can make a substantial investment and don’t waste energy over small allocations.