‘The Vijay Kedia Meet’

July 08, 2022 | Market Talks

The Niveshaay team got lucky to get an opportunity to meet and interact with Mr. Vijay Kedia who is know for his spectacular success in investments like Atul Auto Ltd. (100x), Cera Sanitaryware (100x) and Aegis Logistics (40x) to name a few. It was a completely different experience to know about his journey from the person himself. He has written some incredible quotes and known for his prowess of striking the right note on the essence of stock markets through his singing compositions.

Few things that we learnt from him that we think are worth their weight in gold:

His Investing Mantra: ‘SMILE’

Small in Size
Medium In experience
Large in Aspirations
Extra-large in market potential

A company which is smaller in size is always a better opportunity to look for because a smaller company like a fish has huge potential to penetrate or gain more market share and become the crocodile whereas, for a sizeable company to grow or penetrate further in a pond is comparably more difficult. He very famously quotes ‘fish in an ocean is far better than a crocodile in a pond’.

Medium in experience means he looks out for management that have an experience of 15-20 years and should have seen 2-3 down cycles with good times in their business graph. Such downcycles are great source of learning’s for the management to judiciously allocate the capital and earn prosperous returns. This gives them the ability to drive growth in the right direction.

Oh! We could completely relate to this mantra as our primary focus is on small-mid cap companies.

“Knowledge, courage and patience are key to successful investing. Courage will be tested in bear market”

Out of these three, Courage is the most important. Idea can be borrowed but not conviction. Without courage, it is not possible to have higher allocation in a stock and stick to a company without any fear if the price isn’t moving. Sometimes, it takes time for the market to give value to a company. He shared how he pitched his investment rationale of Atul Auto Ltd and Cera Sanitaryware Ltd. to institutions but no one believed it. Rome was not built in a day. Similarly, it takes time to build a strong portfolio. Build your own conviction, invest, keep patience and move on. Atul Auto Ltd. is a classic example on how on the basis of his strong conviction, he took 20% stake in the company. He even went to China with the promoters for business development.

His ability to think long term—how does he manage to hold an investment for 8-10 years ?

He explains when you use a torch, it gives a vision of upto 25 meters. You can’t see things which are 100 meters distant from you, right? Investing also works the similar way. On the first day, it’s difficult to predict the growth trajectory in next 8-10 years. Invest in a sunrise sector, observe progress at regular intervals and stay invested if it’s going according to your investment thesis.

The ‘Management Factor’ in investing

The company might have excellent product offerings, ultimately the management is responsible to thrive the company. The management of the company must have hunger to grow, shrewd business acumen, honest intentions, undying passion towards work and much more. Observe body language and tone of management- speaks volume about their characteristics.

"Alone you can go fast, together you can go far". He applies this in his investing strategy aptly. He believes, a good team is a must to grow the business multi-fold rather than having a one man show.

Some money management and life lessons from him:

Avoid getting emotionally attached to any company, as he quotes “don’t marry your stocks.” Track them on regular basis and hold them till the thesis holds true.
“Only two people can buy at the bottom and sell at the top- One is God and the other is a liar.”
A company focused on its core business should be watched for rather than a company shifting its focus on different businesses.
He very aptly pointed out that he invested in a company that was originally into the business of tea plantations, forayed into sugar manufacturing but when they announced its plans for opening a dairy business as well, at that point, it was clearly evident to him that the company lacks focus and feared “ab chai ki dukan hi khol lenge”
Always have a fixed income, apart from the market gains for your day-to-day expenses, and invest that portion of your income that you will not need for at least the next 3 years.
Invest in such a way that you have a peaceful sleep at night. Mental capacity is of utmost importance in investing.

Whenever, we meet such experienced investors, we think how lucky our we to get their wisdom at such young age. Of course, your own experience is important but meeting and learning from them can help us to avoid some mistakes and become a more informed investor. Reading about a person and meeting in person is altogether a different experience. Happy to have this opportunity.

Ending with his two very good quotes:-

“Invest like a bull, sit like a bear and watch like an eagle”. (mantra for long term investing)
“Bull market creates Stupid Investors, Stupid Investors create Bear market, Bear market creates Smart Investors, Smart Investors creates bull market.”