How Basant Maheshwari made a big bet on equity, made his wealth

Raised in Kolkata, Maheshwari is a co-founder and partner at Basant Maheshwari Wealth Advisors LLP, a SEBI-registered portfolio management company.

“My investing journey began when I was in college during the Harshad Mehta boom in 1991 and I saw stock prices double in a matter of days,” he told Mint. Maheshwari bought cheaply priced companies through stock quotations in newspapers, and kept them for a short time before selling them. He earned some money but also lost some. Maheshwari admitted that in the first eight-nine years, he kept losing money in the stock markets. “I believed stocks would make me rich but I just don’t know how,” he said.

By the time Dotcom was busted in 2001, it was back to square one – there wasn’t enough wealth creation to show for its 10 years of investments.

Maheshwari, who studied cost accountancy, then turned to coaching to support herself. “I taught anything people wanted to learn—accountancy, MBA and even tuition for a stock market course—whatever that could support me,” he said. And he mortgaged all the money he earned from taking tuitions in the stock market.

His fortunes changed within a few years – he bought his first multibagger stock ‘E-serve’ in the early 2000s. And its price increased six times.

“Until then I didn’t know what I was doing. I was buying stocks that were crashing, thinking they would make me money. My perspective when it came to the writings of Warren Buffett, Peter Lynch, and Jesse Livermore changed,” he said.

By 2002-03, things were back on track for Maheshwari, and by 2008 the stock markets had made enough money for her to live on her investments alone. One of his major multibagger stock picks was Pantaloons.

However, the Great Recession had some lessons for him. Maheshwari saw her fortunes collapse and rebound within a span of two years from 2008 to 2010. That was when he felt the need to diversify his sources of income, and he started an investment advisory firm in 2011. The recession also gave them another one. Great Buying Opportunity—Page Industries (Indian manufacturer and retailer of innerwear, loungewear and socks) in 2009.

“I used to wear jockeys at home, and Peter Lynch’s principles — invest in products you love — supported my buying decision,” he told Mint. However, this was no substitute for careful analysis. And so, Maheshwari visited Page’s manufacturing facilities and did some detailed homework. He spoke to Jockey’s global chief executive, and was often concerned about the prospect of Jockey terminating Page’s license. “The promoters of the page used to sell all the time and it was a red flag. But I stuck,” Maheshwari said.

In 2014, a new system of rules for investment advisors was introduced by market regulator SEBI and Maheshwari decided to change her business. He ended the advisory practice and launched a Portfolio Management Service (PMS) in 2015. Soon after, in 2017-18, he bought his next set of multibagger shares of Bajaj Finance and DMart. “I’ve always had a focused portfolio. No more than 10 stocks. I also limit my investments in single stocks at 30% of my portfolio,” he said.

These have become small-caps but Maheshwari feels that this avenue of wealth creation has now closed. “You don’t get cheap small-caps anymore. Private equity funds have already bought them. What I mean is that now you can’t expect a 30% CAGR from small-caps – they will still give you reasonable returns.”

Maheshwari has also launched a portfolio on Smallcase with 12 stocks and he invests in 10 lakhs of his own every month in this. Maheshwari says that he personally buys and sells stocks similar to his PMS, although he does not trade through his PMS.

He invests almost 100% of his money in stocks and increases this allocation by taking some debt so that it is ‘over 100%’, he says.

Maheshwari does not invest in real estate or gold, except for a few sporadic purchases of the latter made for sentimental reasons. He does not have health insurance or term insurance. “I don’t believe in getting rich slowly. The traditional formula put in place by financial planners of a diversified portfolio will ensure that you don’t retire before 60.”

He has some international stocks, especially Tesla, which he bought before 2020 and again this year. “You have to drive a Tesla to really understand the potential of this company,” he told Mint.

It is difficult to replicate Maheshwari’s extraordinary journey. They’ve taken big risks with their finances – risks that would devastate small investors. He has done the experiment of buying Reliance Industries in 2020 and Metal stock in 2020-21, with a horizon of one year.

“We played liquidity momentum but now we are back to our old structure of buying stocks for 3-4 years,” he told Mint. He invests money with the seriousness of a professional rather than the calmness of a part-time investor. “I don’t look for 12-15% returns. I expect too much from my purchases. Don’t buy stocks just to beat inflation. To protect yourself from 8% inflation, you have to lose 40% Maybe,” he added.

Maheshwari says that he does not aggressively promote his PMS and does not want to start a mutual fund.

“When the market falls, customers demand an explanation. If I myself don’t know what’s going on, what am I going to tell them.”

“New-age tech stocks that aren’t burning cash will rebound,” he said, noting that he is watching Nykaa eagerly.

Wealth for Maheshwari means peace, security and comfort – even as she seeks aggression in her investments and elsewhere. “I travel and travel to countries around the world. I drive fast,” he says.

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