Porinju Veliyath’s lessons from the 2017-18 midcap meltdown

Veliyath acknowledges that he isn't a sophisticated analyst or fund manager but takes pride in delivering superior returns to investors over more than 20 years

From a law school graduate to a prominent investor, Porinju Veliyath has come a long way! In a recent interview with Moneycontrol, Veliyath, Founder and CEO of Equity Intelligence, reflected on his journey. He expressed his lifelong interest in equities, dating back to his student days. His career began as a floor trader in Mumbai in 1990, marking the start of an exciting journey.

Veliyath acknowledges that he isn't a sophisticated analyst or fund manager but takes pride in delivering superior returns to investors over more than 20 years. Despite facing a period of underperformance in 2017-18, he redeemed himself, emphasising that every fund manager goes through ups and downs.

Caught off guard by the steep fall in mid cap shares, ace investor, back in 2018, Porinju Veliyath in a letter to his clients asked them to ‘wait patiently’ till a portfolio rejig was possible.

Takeaways and adjustments:

When asked about lessons learned, Veliyath mentioned three takeaways from the 2017-18 period. Firstly, he decided to avoid much smaller and illiquid companies in portfolio management schemes (PMS). The influx of investors during that time led to challenges in managing smaller AUM.

The second takeaway involved transforming his stock-picking style to focus on more significant stocks. Veliyath admitted that he failed to adapt quickly to the increased AUM, leading to temporary underperformance.

Thirdly, he emphasised the importance of being cautious and sober in the current market scenario. While sharing his top holdings like Raymond, Tata Communications, and Godrej Industries, Veliyath highlighted the need for value investors to consider market opportunities, size of products or services, and promoter attitudes.

Porinju Veliyath concluded by advising investors to visualise a company's growth over the next five to 10 years, understanding various dynamics. He emphasised the significance of risk analysis and encouraged a patient and sober approach to navigate the market's volatility.