November 18, 2015

The secret of Rakesh Jhunjhunwala’s success

The secret of Rakesh Jhunjhunwala’s success

An analysis of Rakesh Jhunjhunwala’s portfolio shows that his average returns have been highest from the stocks he held the longest.
At a time when high-frequency trading has allowed market participants to transact in milliseconds, India’s best known stock market investor’s average holding period is still measured in years. And his highest returns are on stocks he has held for at least 10 years.
A 10-year analysis of 84 companies in which Rakesh Jhunjhunwala has an at least 1% stake reveals that he holds his investments for an average of 3.44 years. He has held his stakes in nine companies, including Crisil Ltd, Titan Co. Ltd and Lupin Ltd, for 10 years or more. He has held stakes in 15 others for between five and 10 years. And he has held his stakes in 65 out of 91 investments for at least a year.
In comparison, the average holding period for diversified equity mutual funds has never exceeded two years in the last decade, according to data from fund-tracker Value Research. The minimum was 0.93 years in September 2009, just after the outbreak of the global financial crises. The peak was 1.92 years in March 2015.


No comments:

Post a Comment