“Passionate investors always make money in stock markets. You will never fail in any work if you do it with passion.”–Rakesh Jhunjhunwala
Rakesh Jhunjhunwala is also known by different names, the Big Bull, the Pied Piper of the Indian stock market, the Warren Buffett of India. In this article, we will explore the Family of Rakesh Jhunjhunwala and the stock market journey of Rakesh Jhunjhunwala. What are his investing principles? Is he a speculator or a trader or an investor? He is born on 5 July 1960, is one of the legendary and popular investors and traders of India. A chartered accountant by training, born in a working-class family, Rakesh Jhunjhunwala began his trading and investing journey in 1985 when the Sensex was at 150 with just Rs 5000 in hand and in 2021 his total assets are 3.2 billion dollars. In the Harshad Mehta scam of 1992 alongside Radhakrishna Damani made some serious money by shorting stocks.
Rakesh Jhunjhunwala family
He was born in a working-class family of income tax officer, Radheshyam Jhunjhunwala, in Mumbai. His mom was a housewife. He is the youngest kid of the family with siblings Rajesh and Sudha. Rakesh Jhunjhunwala’s family belongs from the Jhunjhunu area of Rajasthan.
In 1987 he got married to Rekha from Andheri. Rakesh Jhunjhunwala’s RaRe Enterprises is named after the couple: ‘Ra’ for Rakesh, ‘Re’ for Rekha. Rakesh touted Rekha as his lucky charm.
After six cycles of IVF and complicated pregnancy, a little girl Nishtha was born on 30 June 2004, 17 years after their marriage. She experienced three cycles of IVF again before she was conceived. She was 45 years of age when twin children, Aryaman and Aryavir were born on 2 Mar 2009. They’re apparently totally extraordinary yet indistinguishable from numerous points of view. She’s calm and supporting, while he’s loud, jocular even, yet so confident he could get into an argument to make his statement.
Rakesh Jhunjhunwala’s own company RaRe Enterprises
He established Rakesh Jhunjhunwala company called Rare Enterprises, an asset management firm, named using his and his wife’s(Rekha) initials, which has a dozen or so employees whose sole job is to help him make his market bets. “This isn’t a fund. I have no money other than my own and my wife’s,” he says. “She’s my only client. I don’t manage anybody’s money except hers.“
The stock market journey of Rakesh Jhunjhunwala
Rakesh Jhunjhunwala’s passion for the stock market began from childhood as he heard his father talking about the stocks with his friends. He asked his father for what good reason the price of the stocks changes every day? His father suggested reading newspapers as the news that makes the price of stocks changes.
Like any middle-class parent, his father advised him to do anything he wants in life but at least get professionally qualified. So, Rakesh finished his graduation from Mumbai’s Sydenham College, took up chartered accountancy, and turned into a Chartered Accountant in 1985.
When Rakesh Jhunjhunwala started trading and investing in 1985, he had no cash. His dad refused to back him or borrow from his friends. Finally, he managed to borrow Rs 2.5 lakhs and 5 lakhs from customers of his elder brother by promising to give high yields compared with the Bank FD.
Some Profits of Rakesh Jhunjhunwala
First big Win: Tata Tea
Rakesh Jhunjhunwala’s first huge profit was Rs 5 lakh in 1986. He purchased 5,000 shares of Tata Tea at Rs 43/- and within 3 months share was trading at Rs 143/-. He was sure that the business sectors had under-estimated the capability of the company hoping to grow during a period of rising yield production.
Second big Win: Tata Power
After 1986, the market went through a big correction for two-three years yet he had placed that money in Tata Power somewhere between 1986 and 1989. Rakesh Jhunjhunwala acquired Rs 20-25 lakhs through investments in this stock.
In 1989 when V P Singh was the prime minister of India and Madhu Dandavate was the finance minister, there were discussions about the budget being socialist in nature and many were bearish about the stock market. But Rakesh Jhunjhunwala was of the view that V P Singh could never permit a budget that would hurt business.
In an interview, Rakesh said “I thought the first part of the liberalization program in 1983 was launched by V P Singh and I always thought he is a ‘Thakur’ who understands business. So I never thought he will present a budget that will hurt business. He was the PM who was giving broad directions to the budget (but) everybody was humongous bearish.”
The budget was business-friendly and after six months of the budget, Rakesh Jhunjhunwala’s net worth increased from 2 Crores to 20 Crores.
His next big bet was Sesa Goa. The stock was available very cheap around Rs. 25-26. So He purchased 4 lakh shares of Sesa Goa in forward trading, worth around Rs 1 crore. He sold around 2-2.5 lakh shares at Rs 60-65 and 1 lakh shares more at Rs 150-175. The price of sesa Goa went up to Rs 2200 and he sold the rest of them. He takes some other trade as well.
His Biggest Bet: Titan
In 2002-03, Rakesh Jhunjhunwala starts purchasing shares of Titan Company Limited at an average price of Rs 3. The stock then rose to touch Rs 80 and later fell to Rs 30, but he did not sell a single share. On January 2021 Titan traded at a price of Rs 1464/-.
Over the years, he take some really profitable bets such as Lupin, Aurobindo Pharma, Crisil, Praj Industries, NCC, etc.
Some Losses of Rakesh Jhunjhunwala
It is also important to understand that not every trade or investment that Rakesh Jhunjhunwala made was successful. In fact, he has faced huge losses in stocks such as MTNL, Mandhana Retail Ventures, DHFL, Geojit Financial Services, etc. He confesses that he is not as smart as people think him out to be. “My failures are far less known than my victories.”
In Oct 2013 Rakesh Jhunjhunwala purchased 25 lakh shares of the home loan moneylender Dewan Housing Finance Corporation Ltd. (DHFL) for almost Rs 34 crore at a cost of Rs 135.32. When there was heavy selling in DHFL between September 2018 to October 2018 because of the liquidity of the sector, the ace investor increased his holding in the company by another 0.43%. He increased his stake in DHFL by .73% to 3.19% toward the finish of the March 2019 quarter valued at Rs 150 crore. In 2019 DHFL’s stock falling from Rs 150 levels on March 29 to Rs 93 levels as of June 6. He then decreased his holdings in DHFL withholding going down to less than 1% in Dec 2019 and then 0.
Is Rakesh Jhunjhunwala a trader or investor?
Rakesh Jhunjhunwala sees himself as both a trader and an investor. He says what he has learned in life is to earn money in trading and to invest it in stocks.
“Short-term trading is for short-term gain. Long-term trading is for long-term capital formation.”–Rakesh Jhunjhunwala
Trading is what gives you the capital to invest. His trading also helps him investing in the sense that he use a lot of technical analysis for trading at times.
If the stock is overpriced, you should sell but his trading skills tell him that the stock can remain overvalued or get more overvalued. Hence, he holds on to his investments”
From EconomicTimes article, 98% money is made in the market by being a bull, on How he manages both trading and investing?
Well if you have a wife and a mistress and you manage both well, you can do both trading and investing well. And how do you manage that? You keep them apart. One should not know anything about the other.
Trading is momentum. Trading is le fatafat, de fatafat. Maro aur bhago. (Trade and run). You have to follow the crowd in trading. But in investing you can be a bit contrarian, still make a lot of money.
Trading is his friend and trading the ROEs are highest. The cash flows are great.
“I love trading. Given a choice, I would like to make all money out of trading. But that is not possible. You lose money also. I have lost money so many times.”–Rakesh Jhunjhunwala