Never Waste a Crisis
वीर भोग्या वसुंधरा । The brave shall inherit Earth.
Mr. Jain, Chairman and Chief Investment Officer of GQG Partners, is in news recently because he made a killing by investing $1.9 bn in Adani companies — which ballooned to $4.3 bn in less than a year. (You can read more about the news report here.)
Have gathered a few good points from the interview he gave last year in March’23.
Mr. Jain’s philosophy is that Good Price and Good News never come together. He makes three critical points, in the interview:
1. Navigating Imperfections: The Arbitrage of Perception and Reality
— Emphasizes the importance of discerning between perception and reality in investing.
— Cites the instance of ITC investment in 1996 amid tax risks. The stock endured a 35% decline but he held it for over two decades.
2. Seizing Market Opportunities: Elections, Sanctions, and Strategic Moves
— Discusses strategic investment decisions during critical market events.
— Highlights significant purchases during the 2004 Indian elections (30% decline). And the market downturn amid the 1998 US sanctions against India (40% decline).
— Acknowledges lessons learned from both successful and unsuccessful cases. He got nervous post-demonetization in 2017 and missed investing during that time.
3. Fundamental Wisdom: Choosing Quality Over Predictability
— Embraces a philosophy centred on robust businesses with high entry barriers.
— Contrasts the uniqueness of Mumbai airport, an asset that can’t be replicated , with the unpredictability of revenue growth in companies like Microsoft.
— Stresses the importance of acquiring such assets at favourable valuations.
But not has been hunky dory with GCQ — where Mr. Jain holds 70%. Two such instances have been reported in this news item. The fund had a 20% decline in its stock value due to GQG’s 16% investment in Russia, which couldn’t be fully liquidated before the outbreak of war.
Further, GCQ experienced a devaluation due to the sell-off of UK government bonds. This time the fund faced a loss of $12 billion.
Last week Polycab , an India based Cables and Wires company , lost about $1.9 bn in market value due to tax raids. As I compare the Adani-Hindenburg situation last year with the latest Polycab news, it will be intriguing to see which direction the big investors would lean.
Hope you enjoyed reading this 🐱
✍🏻✍🏻I am NOT a SEBI registered advisor or a financial adviser. This blog is intended to provide educational information only and does not attempt to give you advice that relates to your specific circumstances. You should discuss your specific requirements and situation with a qualified financial adviser.
