Started at the age of 19, this multibagger stock picker's investments rose up to 1400%

He has mastered the knack of standing out from the crowd to provide an independent view of the markets. Although, he has most of his investments in largecaps his heart lies with the midcaps, small caps, and microcaps.

Baliga has rich market experience of over 25 years and has worked with top notch groups such as Kotak, Karvy, and Edelweiss in the past.

His first investment was an IPO where he was allotted 100 shares of Kinetic Honda which was issued at par Rs. 10/- but opened for trading at Rs. 150/- (which translates into a return of 1400%).

The first worthwhile multibagger investment by Baliga was in Praj Industries at around Rs. 5 which gave him over 400x return.

His few multibaggers stock picks include names like Financial Technologies at Rs. 12 which gave me over 100x, Bharti Airtel at Rs. 25 which gave me 30x and many more, Himatsingka Seide which returned nearly 10x, Nelcast 10x, HEG 3x, Edelweiss 5x, Action Construction 5x, Ashok Leyland 3x to name a few.

He also has a small portfolio of microcaps which gave him stupendous returns such as Kisan Moulding, Axtel industries which I have now exited. However, he has also eroded wealth with some bad picks such as Koutons, Deccan Chronicle, and a few others.

Here are excerpts of his exclusive interview with Kshitij Anand of Moneycontrol:

When did the love affair for equities begin?

I got interested in stocks when I was in school since our Economics teacher would discuss the stock markets. I started investing in 1983 when I was about 19 years.

My grandfather had bequeathed a fixed deposit of Rs. 40,000 which I slowly started investing in equities. A number of stocks turned into a goldmine those days as IPO price was controlled, thus if you were lucky you could get a multi-bagger.

For example, I was lucky to have been allotted 100 shares of Kinetic Honda which was issued at par Rs. 10/- but opened for trading at Rs. 150/- (which translates into a return of 1400%).

At some point or the other, I had quite a few of current blue chips in my portfolio as IPO stocks – Hero Motocorp, Eicher Mitsubishi, Ind-Suzuki (TVS Suzuki), Swaraj Mazda, Guj Ambuja Cement, Kotak Mahindra Finance and many more.

I had a number of multibaggers during my over 3 decades investment experience, but what’s most important is the position size.

The first worthwhile multibagger investment of mine was in Praj Industries at around Rs. 5 where I wanted to pick up a percentage stake but the stock flared up by then.

However, my investment was much higher than my earlier positions and this stock gave me a 400x return.

What is your investment mantra?

I am a contrarian by heart. I don’t go with the crowd but prefer to stand out and watch out for unique opportunities. I believe that a first mover always makes more than the rest.

It gives me enough time to study the stock and also to buy since not many are interested in it during that period. The sector and the management are the most important corner stones for any investment but the find impeccable management is difficult.

Most of them are various shades of grey, thus one needs to see how much of that is discounted in the price. In most of the cases, I need to like the macro story, as I believe that the rest of the picture will fall in place if the driver (management) has a fire in the belly.

Stocks which have already given multibaggers returns:

Other than Praj Industries, I had picked up Financial Technologies at Rs. 12 which gave me over 100x, Bharti Airtel at Rs. 25 which gave me 30x and many more.

Recently, I bought Himatsingka Seide which returned nearly 10x, Nelcast 10x, HEG 3x, Edelweiss 5x, Action Construction 5x, Ashok Leyland 3x to name a few.

I also have a small portfolio of microcaps which gave me stupendous returns such as Kisan Moulding, Axtel industries which I have now exited.

However, I have also eroded wealth with some bad picks such as Koutons, Deccan Chronicle, and a few others.

What do you prefer the most – largecaps, mid caps or small caps/microcaps?

About half my equity portfolio is safe large caps but my heart lies with the midcaps, small caps, and microcaps. This segment is challenging in terms of finding winners and I love interacting with the management of such corporates.

Many times you come across outright crooks whereas with some decent ones you form a bonding and watch them grow along with your investments.

Where do you see markets in next 4-5 years?

I don’t want to hazard a guess on the Nifty levels, but I do see the equity markets outperforming every other asset class but it can’t be a one-way move.

There would decently sharp corrections, which should be utilized to invest. I also see the cycles getting squeezed, thus increased volatility will provide investors too to book profits and buy back.

What are your top bets which could turn out to be a gold?

I have been going slow on investments last few months since I expect a sharp correction before the next move up. However, some of my recent investments are again in Praj Industries, nearly a decade after I exited.

I expect the 2G Ethanol Plants to take off well as the world moves towards eco-friendly fuel. Among others, I am invested in Dabur and Emami which I expect would benefit from the expansion of the market, thanks to Patanjali.

I have also been buying into large cap Pharma Stocks as most of them seem to have over-reacted to the woes. Onmobile Global is a risky bet but I see the Telecom ancillary performing better in an ever-expanding telecom market which is available at a discount to its enterprise value.

Who is your investment guru?

I don’t have any investment guru. I believe that investment method to be adopted is very personal – in the sense what may work for me need not work for you.

I have read about most of the stalwarts, but my own learnings and experience of the last few decades help me weather any storm in the market.

I have trained myself not to get swayed, thus I don’t get too excited when markets are touching new highs, nor do I panic when markets crash.

Any particular incidence you recall from the market?

I was financially independent through my college days in Kolkata due to the earnings from investments & trading. I bought my own house and a car early in life but witnessed my first crisis during the Harshad Mehta crash.

I lost most of my wealth to the extent I had to borrow from my dad when I shifted to Mumbai in the mid-nineties. Although, we keep advising everyone to learn from their mistakes -- I committed the same mistake again during the Ketan Parekh scam.

I thought, being in the nerve center of the stock markets in Mumbai I had gotten smarter. These experiences taught me a lot about relationships within the stock market fraternity, psychology of investors & traders and thankfully didn’t commit the same mistake in the last 15 years.

What are your hobbies?

Being at the right place at the right time helped me turn my hobby turned into my profession. However, I wind down with gardening and travel. I take off on about 4-5 short breaks and 1 long vacation every year.

What books are you reading?

I prefer reading newspapers & magazines, scanning interesting articles on the web compared to reading a book. Although, I am a very patient person when it comes to daily life, my patience levels are low while reading a book.

But some of my favorites are “Fooled by Randomness”, “When Markets Collide”, “How to think like Benjamin Graham and Invest like Warren Buffet” and “Investing the Templeton Way”.