Porinju Veliyath: Prestigious Value Stock Picker

3 Dec 2020  Read 4642 Views

Known as the "small-cap czar", Porinju Veliyath has proved himself to be a very good stock picker, as most of his investment suggestions have shown bullish results. He gave investment advice in companies that others may not have thought would be profitable, but people who followed his decision were not left unsatisfied as they did enjoy the wealth maximization. 

But his investment success was not limited to small-cap firms; he was also a genius advisor when it comes to ultra large-cap firms like Reliance Industries. In 2016, he tweeted that the reliance industry with Jio will be able to go bullish, which was proved right because people are still earning on that particular investment. Usually, blue-chip companies don't move that fast with respect to wealth maximization, but Porinju Veliyath was able to see past this and went ahead with the buying decision. 

All this proves that the name that he has earned as an investor is because of his successful buy/sell decisions based on analysis irrespective of the market capitalization.

Background of Porinju Veliyath

Porinju Veliyath is a Kochi based investor and fund manager who runs a portfolio management company called Equity Intelligence India Pvt. Ltd. He was born in a middle-class family on June 6, 1962. In his teen years, his family faced a financial crisis, and the situation became so serious that they had to sell off their house to repay loans. 

This made him make a promise to himself that he will find a job through which he can help and support his family. He started working alongside his studies. His first job was as an accountant where he was paid mere Rs. 1000. After that, he worked in Ernakulam Telephone Exchange and also earned a degree in law from the Government law college, Ernakulam.

Even after getting a degree, he was unable to find a good-paying job that could help in fulfilling the basic amenities of his family. So, in 1990, he decided to move to the city of dreams, Mumbai.

Porinju Veliyath: Early days of investing

Porinju Veliyath started his career in Mumbai at Kotak Securities as a floor trader, a job that was completely different from the course that he had graduated in. While working there, he was able to understand many aspects of the financial world and all that knowledge made him a professional level trader.

After working there for 4 years, in 1994, he started a new job as a fund manager and research analyst at Parag Parikh Securities. Veliyath continued that job for the next 5 years. But the Mumbai life was not working out for him; thus, he packed his stuff and left for his hometown.

In 1999, Porinju Veliyath moved back to Kochi and thought of utilizing all that stock market knowledge and experience in earning some wealth out of the stock market. His very first investment was in Geojit Financial Services. Now here's an interesting fact, the stock he invested in was regarded as a bad penny stock, but he did not give two cents about that and stayed confident about his investment decision. And later, that investment generated multifold returns, just as he had predicted. This says a lot about his way of investing and his strategy. Following this, he also invested in Shreyas Shipping, which later became a profitable investment.  

All this personal wealth creation paved the path towards starting his own firm and thus, in 2002, Equity Intelligence India Pvt. Ltd was born. Currently, Equity Intelligence is managing both investors' portfolios alongside Veliyath's own portfolio.  

Porinju Veliyath's Investing strategy

Porinju Veliyath has always claimed that he does not hesitate from investing in lesser-known firms to increase portfolio value. And he stayed loyal to this from his very first investment decision. His most prominent strategy that can be identified through his investment patterns is that he does not limit himself to a particular market capitalization. According to him, if a firm is running a stable business, then as investors, you should not look for market capitalization.

He picks out stocks that are currently underestimated by the market for investment. So basically he follows the same strategy as Warren Buffet, which is the Value Investing strategy. You will see that his portfolio does not have any stocks that most of the investors go for but irrespective of that fact, the investments have generated him profitable returns.

Porinju Veliyath Portfolio

The major section of his portfolio consists of small-cap stocks, which is the reason why he is known as a small-cap investor. Since it is small-cap, it is very much possible that you may not be familiar with the firms and their businesses. 

Quarter Ending in September 2020

Stock Name

Quantity Held 

Holding Percentage

Holding Value 

Ansal Builwell Ltd.

150,000

2.03%

74.9 L

Archies Ltd.

1,200,000

3.55%

1.8 Cr

Ashok Alco-Chem Ltd.

100,000

2.17%

42.0 L

Duroply Industries Ltd.

183,838

2.85%

82.5 L

Digicontent Ltd.

666,666

1.15%

75.3 L

Eastern Treads Ltd.

100,000

1.91%

36.6 L

Emkay Global Financial Services Ltd.

343,500

1.40%

2.4 Cr

Orient Bell Ltd.

41,000

0.29%

57.4 L

Praxis Home Retail Ltd.

500,000

1.81%

1.8 Cr

Shalimar Paints Ltd

800,000

1.47%

5.9 Cr

Thejo Engineering Ltd.

50,000

1.44%

6.1 Cr

What made him Successful?

You will find that in the portfolios of most of the successful investors, there will be stocks of known big firms, but Porinju Veliyath has a different take on this, clearly visible from his portfolio concentration. He always asks people to "keep it simple" when it comes to investing and asks to not run away from unconventional investments. 

According to him, he does not have a any hard and fast investment strategy; the only rule he follows is the SEBI guidelines while picking stocks. This flexibility in investments and resorting to price and value of the stock for buy/sell decisions is what makes him an inspiring and successful investor.

Lessons to be learned 

The most important lesson that you, as an investor, can learn from Mr Veliyath, is that one should never limit their investment decision to the firm's return generating ability. Many of his buy/sell decisions were either considered penny stock or were maybe earning at a loss, but eventually, they all turned out to be major wealth creating stocks.  

Instead of thinking about returns, go for stocks that are currently in the path of increasing the company value. As the value goes up, returns will also become high. He has never shied away from investing in places that seem to be challenging.

So, if you trust your analysis and instinct, even if the stock is currently not at its bullish but has the potential to be, it is advisable that you go for it.

Conclusion

There is only one thing that can be said about Porinju Veliyath, which is that he has a very inspiring success story. After knowing how he made it to the top, a new investor will not fear the very volatile market; instead, they will want to keep going forward and grab that rewarding profit.

About the Author: Ananya Mitra | 10 Post(s)

Ananya is a CFA aspirant. Other than nurturing the dream of becoming a financial analyst since high school, she likes to indulge in words both of fiction and non-fiction.

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