Rakesh Jhunjhunwala Portfolio – Penny or low Priced Stocks
Rakesh Jhunjhunwala is one of the famous Indian investors. He is described as Indian Warret Buffet. He has been investing in Indian stock market from his college days. Some of us might be interested in cloning his investments as our investment strategy. He has been investing in several penny stocks or low priced stocks too. While the value of such investments could be small in his portfolio, one might think whether it makes sense to clone such penny or low priced stocks in our investment portfolio. One of the reader Kishore S wanted us to analyze this on suggest a topic. In this article we would cover 10 Penny or low priced stocks which Rakesh Jhunjhunwala has been investing, how these were priced say 4 years back in his portfolio.
Also Read: Best Largemidcap Mutual Funds that are consistent performers
One of the reader was asking
“Suresh Sir, In one of your old articles, you have indicated that we can clone / replicate the investment strategy of experts. I want to invest in small priced stocks where Rakesh Jhunjhunwala is investing in the last 3 to 5 years. Can I invest? Any analysis on this would help me. I am HIGH RISK INVESTOR”.
Rakesh Jhunjhunwala Portfolio – 10 Penny or low Priced Stocks
This portfolio holding is as of end of Oct, 2020 based on the information available on stock exchanges. We have filtered bottom 10 stocks based on current market prices of these stocks invested by Rakesh Jhunjhunwala as well as his wife Rekha Jhunjhunwala.
Currently Rakesh Jhunjhunwala holds 5.66% only in these low priced or penny stocks.
There are 4 low priced stocks where the investment is over Rs 100 Crores i.e. NCC, GMR Infra, TV18 Broadcast and Karur Vysya Bank.
Balance 6 stocks are real low priced stocks or penny stocks where the investment amount is less than Rs 18 Crores. Their share prices are between Rs 6.6 to Rs 28.1.
Rakesh Jhunjhunwala is holding 8 Penny or low priced stocks for over 4 years where the share prices have fallen between 38% to 93% of their value in the last 4 years. See below snapshot.
What are the lessons learnt from Rakesh Jhunjhunwala Portfolio – Penny or low priced stocks?
Investors would be always hungry for returns. I wrote about Rakesh Jhunjhunwala portfolio exactly 4 years back. Here are a few lessons which we could learn.
- Rakesh Jhunjhunwala portfolio contains penny or low priced stocks totaling to 5.6% of the overall portfolio. The majority of his portfolio is in large cap and midcap, some amount in smallcaps too.
- Rakesh’s penny stocks or low priced portfolio current market prices have dropped by 60% in the last 4 years. This is based on current active stocks and they would have reduced / increased their stake in the last 4 years. Means Rs 100 worth of share price is now valued only Rs 22.
- Though penny or low priced stocks have fallen by 60%, the overall Rakesh Jhunnjhunwala portfolio has increased from Rs 10,000 Crore to Rs 13,000 Crores. This is obviously because of 94%+ is in quality portfolio of stocks.
- Drop in such share prices for such low priced / Penny stock prices could be common. Investors should be willing to bear such risks in mind if they are looking for high return investments.
- It is always advisable to avoid penny stocks. One can try low priced stocks (say above Rs 20 onwards) if they are willing to bear the risks. Replicating a penny stock or low priced portfolio from experts may not always reward investors. Even if one want to replicate, they can go with blue chip stocks, largecap, midcap and smallcap stocks.
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Very useful sir.
Thank you Sagar
Well written article by Suresh-ji in reply to a good question by one of the readers like me.
If any one wants to invest in such penny stocks, the lessons are:
Let us assume the reader has Rs. 10 lakhs to invest.
(You can not fool yourself by saying “I have only one lakh now… this will go to penny stocks and let me save and invest the balance Rs. 9 lakh in other good stocks in future.)
A) You have to invest a max. of say 10% of total amount in such stocks. (one lakh only).
B) This one lakh should be spread over at least 7-8 names and not 1 or 2 names.
C) This one lakh may go down even to Rs 10000 and a strong mind and guts needed.
D) This one lakh will be tied up for years, say, 4 years or 5 years etc.
Generally, investing in penny stocks is okay for multi-billionaires and crorepatis because for them the amount they put in penny stocks is like ‘giving tips to hotel waiters’. Definitely I am not in that category!
Thanks for your comments Hemanth
In case KVB, Last 5 Year high is Rs. 133.07 (approx) after all adjustment. So pls may look your table again.
Gaurav, Apologies for the error. There was bonus issue for KVB, hence the price in Oct-2016 should be normalized. I have corrected it. Thanks for pointing this.
It also depends at what price did he buy these stocks…so as to calculate whether it is a profit/loss buy, and by what percentage… Rather than check position 4 years back.
I agree Suraj. What I am saying here is just comparing current prices with that of last 4 years back. Even there are chances they would have reduced / increased the stake in between too.
The very fact that more than 94% investment is in large cap with very heavy and decent returns is a guiding factor for we all. This 94% holding in large cap at the portfolio level actually cushions RJ and therefore he can take some risks. An ordinary investor should refrain from doing any such act because the risk profile and portfolio construction is different in each case.
I agree Kamalji. But small investors cannot not afford that way