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Hello, welcome to a new chapter of Fund 3s. Today I was reading a feature in an online magazine about Vijay Kedi. Before this, there was a mention of Vijay Kedi in many channels and in many news leaders, but the matter did not strike me. But this time, when I got a chance to read it, I found many things in it useful.
So, I thought I would share some things that I found useful. Some of you may have heard or read about him. For those who are like that, you can skip this video. Otherwise, you should use everything I say in your trading experience. It is not necessary. You can try your best to implement the things that you think are good and useful.
So, how does he come to our news value or this investment arena with such importance? His biggest attraction is that he turned Rs 35,000 into Rs 500 crore. He is not someone with a big investment background, he is an ordinary person, not a chartered accountant or FCS graduate. So, all these discussions about him are just a few tips and tricks that he shares.
So let 's take a look at this first, and this is his smile strategy . If we say SMILE strategy, the first S in it stands for Small Companies Prefer Small Companies . That is, prefer small companies. When we say small companies are the best investment, don't mistake them for penny stocks. Penny stocks are not small companies in those sectors, because if they become big companies, in his opinion, there is no real opportunity for them to grow again.
This is not my opinion, it is his opinion. My opinion may be completely different, but it is his opinion. So, if we take small companies in those sectors for example, now within a software or AI IoT sector, there is a place where big companies like TCS, Wipro, TCS, etc. are ruling. Then there are companies like Emphasis and Coforge that are doing almost the same business.
The size of Emphasis and Coforge is very small when we compare them with TCS. So, small companies like these have more room in the sky to grow, just like big companies in the sector have more room to grow. If you select such companies, they will be more useful for growth and will get better returns.
Then the next one is MI. It is about management, it is about the insight of management, it is about insight management, it is about insights, it is about MI, it is about MI of Smile, if you say that he prefers a management with 15 to 20 years of managerial experience, that is what he prefers, if you say that they are very inexperienced, they have not seen a market cycle, that is, the ups and downs of the markets, it is the same as what is said about our investors today.
Today's investors, the majority of 70% or 75% of the investors in the market, have not seen a major market crash. There has not been a significant market crash here since the market crash that started in 2008. The 500-600 points that have occurred in the last few days, when the Sensex is at 6000, there are many investors who are crying in a correction within 1500 points, which is the real market crash.
That's why many people don't know how to manage it today. So that's what he prefers. Those who have completed one or two cycles. If we say that it's one or two cycles, then the management should be one who has faced the good, the ups and downs of the market of that company's product. They have experience.
On the basis of that experience, they can lead the market or this company to the top. On the other hand, what's the problem with being very experienced? If you have a lot of experience, you have a lot of experience, but you don't have the enthusiasm to lead the top aggressively. That's why he prefers a company with 15 to 20 years of managerial experience or management.
That's what average experience is for management. If we say that the next thing is, he says that it's large aspiration. That is, the company should have a strong desire to go very far. That is, to capture more markets and to increase the volume of the company. We need a management that has the drive to increase.
So, we have a company today. Its turnover is this much. It is now in good profit. The operating profit margin is not bad. The NP is not bad. Up is not a management or a company that thinks it will go up like this. What he is looking at is a management that has the drive to grow even further. What he is looking at is an extra large in market potential.
That is the last E, which means extra-large market potential. If we consider this product or this company, there must be a management and company that has a desire to bring this company's products to markets that are unexplored and have not yet been reached. Not only the management and the company, but also the product must be like that.
That is the biggest drawback of many of the new generation digital product companies we are talking about today. That is why many of our companies, if we talk about digital companies, often lack scalability to the next level. It's not that it's not completely not, it's that it's less scalable. For example, if you ask our Zomato or our UberEats or Swiggy, they don't have scalability, then yes.
Like they said, they work as a food aggregator in India, they can work in the US, UK, Africa and Australia if they want, but how much they can work there and how well they can establish themselves is a big question. We know that Ola struggled in London and Australia. So, a product that is scalable and very practically sellable in many corners of the world, a management that has the desire and drive to scale such products, such companies should be selected.
Now, if we go through the companies he has acquired, we can see that the first company he bought was a company called Rapco or Rappro. So he invested all his money in it. This one company went to great lengths to ask anyone and became a multi-bagger. I got a lot of returns from it. Similarly, Sudarshan Chemicals is a classic example of his long-term vision, that is, a company with a capable management and product that has the capacity to expand to many parts of the world.
Sudarshan Chemicals was a company that no one wanted when he bought it. Nobody cared about that company. Nobody made any pigments. However, five years after he bought it, this company became the fourth largest pigment manufacturer in the world. It exported the most pigments to Africa, the Middle East, Latin America, and obviously India and Asian countries.
It is now the third largest pigment supplier in the world. So, the idea is to look ahead and choose companies with strong fundamentals that have the potential to rise. Another thing is that after looking at his investment strategy, we know that he is not a believer in diversification. One thing we say in normal fundamentals, one thing we say in basics is that we should always diversify our investments.
Just because he has not diversified, you should not diversify, that is a risk. Diversification is a management strategy because if a sector or a company is in loss and it is performing poorly, then we should diversify so that we can gain profit from other sectors. But he does not believe in diversification.
He is concentrated and as I said, he first invested in a company called Repro and got good returns from it. He became a multi-bagger. After that, he invested in Punjab Tractors and then in ACC. Because of this, he got a lot of returns. After that, he started dividing his investments into four, five or ten companies.
So I do not see this as a good trend, but he did that. Another thing he is reminding us of is that you must have seen some companies, their prices will go up, but the company's earnings or top line will be almost stagnant. They will almost go up from there. But they will go up, especially big companies.
Whether it's for no reason or because market sentiment is positive or because it's a bullish market like it is now, it's still a bullish market. No one has any doubt about that. The market is bullish. Okay, so no matter what anyone does in a bullish market, it will go up. It goes up for that reason.
But if we take it over a long period of time, what happens when this goes into a bearish market? If we consider what happens when this goes into a bearish market, companies that don't have a top-to-bottom growth will fall into a bear market. So avoid companies that have a chance of falling like this .
That's his other advice. And he says something very interesting. If we always consider the company as a car and the management as a driver, then what we call investors are its passengers, its passengers. So the car may be a bad car, it may not be a big high-performance car, it may be a basic level Nano or Alto, but if it is a good experienced driver, it will take you to your desired destination safely and comfortably.
On the other hand, if you buy a Ferrari, if that driver is not responsible, if that driver is not performing well, if that driver is not capable of doing his job, even if you drive a short distance, there is a chance that the car will crash somewhere, or crash, or drive into a ditch or a canal, and lower it.
So you always have to calculate what is called management efficiency. So he is talking about this. We often go into a quantitative analysis. We check the fundamentals. Then we check the technicals to know which level to enter. We don't think beyond this, but only if we do a qualitative analysis of the efficiency of this management, who is leading it, what is their background, and if you mean long-term investments, never leave this one thing out.
This is what I say about many penny stocks. Penny stocks may look very good when you look at the numbers, but their performance may not be good because the managers lack credibility. So, there are a few companies that remind us of the need for credibility and integrity of management. Let's not forget them.
Yes Bank, DHFL, PC Jewelers. These are all companies that reminded us of how much credibility or integrity a company needs. There will be some who have invested money in them. And another thing is that we need patience. For example, some of his investments were Atul Auto or Serra Sanitary Ware. In 2007, he made a profit of three times his investment.
However, when the recession and market crash of 2008 came, it was reduced to cost. That is, if the company that was worth three rupees yesterday reached one rupee today and he bought it for one rupee, or even if it fell to one-third, he did not lose hope. He had hope and strong faith in the quality of the company.
So he took that opportunity as an opportunity to buy more stocks. Therefore, when he came out of the market crash of 2008, his returns increased tenfold. So these are some of the things that we can understand from our experience of success and from his market journey. You can also implement some of these things.
When I read this, I thought it was a little useful, so I thought I would share it with you. With this, this chapter ends here. Until we meet again in another chapter, thank you and greetings. Please subscribe and click on the bell icon for more videos.
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