The investment journey of Sanjeev Bhasin of IIFL Securities

“I was quite bright as a student at St. Columbia’s School. My father played for Rest of India vs West Indies Cricket One step away from team test cricket. I was a pretty good cricketer too, but since I got admission in SRCC for Bachelor of Commerce (Hons), I stuck with that,” reminisces Bhasin, 59, who is the director IIFL Securities Ltd.

After college, Bhasin completed his Chartered Accountancy course. “I did LLB for almost two years but did not complete it because by then I was bitten by the stock market bug,” he recalls.

Bhasin started going on the trading floor in 1985. “In my life, I had no other option, only the stock market. And that’s why I’ve gone through all the trials and errors over a span of 33 years,” he says.

Prior to IIFL, Bhasin was a director with Deutsche Bank as well as HB Group. Bhasin, who designed model portfolios that are available to retail investors on platforms such as Smallcase, personally manages large portfolios of high-net-worth individuals.

Bhasin shared his portfolio details, Investment Strategy and financial travel for special Peppermint Series Guru Portfolio. Edited excerpt:

Do you remember the first few stocks you bought?

In the initial days, I was very keen on holding MNC (Multinational Company) shares, and there was a lot of demand for Pharma MNCs at that time. Glaxo was available for 30. This is one stock that made me a lot of money. Also, a friend of my father’s suggested Ponds. he was trading on the stock 55 at that time and seven or 10 years later, the firm merged with Lever. Today, it’s almost worth 55,000, and the Ponds brand is still going strong. There were also a lot of mistakes that I made over time.

Which were the stocks where you took the hit?

The first stock in which I burnt my fingers was Lohia Machines Limited (LML), and it was a forward derivative stock. Also there was a urge to participate in initial public offers. Certainly the listings were pop, but the gains were not sustainable as this was the era of crony capitalism, meaning promoters were shady and wanted to play the market. The bigger lesson from this: don’t rely on easy money.

Was there any investment strategy that you followed in the initial days?

I followed a very simple principle: If I want to make capital, I have to trade. So, I did the business side, which is revenge (carry-forward) system, and whatever I earned from it, I invested in good stocks. In my early days, there was an arbitration between Delhi, Bombay and Calcutta, and most of the multinationals were transacted in Bombay. We used to use this arbitrary window to get the odd lot cheaper in Delhi. I used to accumulate a lot of odd-lots at 30-40% discount. It worked for a while, but then I learned the hard way that speculation was harmful. And I realized that portfolio is a must if you want to build wealth for the long term.

When did you start investing seriously?

Soon after, I became a large institutional broker in the firm of my uncle, a well-known stock broker and chairman of the Delhi Stock Exchange. I went to Bombay, and started learning what institutions buy and how they work. I started in 1992 and continued as an institutional broker till 2001-02. UTI India Fund was the only foreign fund and in 1999 I bought 7 million shares Hindustan Zinc on them 9 each, and in the end, it went to the promoter. I made some money but also learned how portfolios are allocated and where you can make money.

What is your investment strategy?

If I handle a client portfolio today, I’ll give them the last stock. As far as investing is concerned, 50-55% is always in large-cap, run-of-the-mill stocks or stocks that have always performed well. Second, I prefer to have 30% cash as it gives me a lot of small trading opportunities.

What is your current asset mix?

As a compliance measure, I cannot trade on my own and I do not invest a lot. But I am still an equity man today. I’m 59, but I won’t go below 65% in equities. Debt component will be 10-12% and gold as an asset xx% But my real estate holdings have started to increase. So, whatever capital I have created in the last three-four years has gone into real estate. On the alternative side, my biggest investment will be my stock options. I don’t go the other route for compliance reasons.

How do you zero in on stocks?

First, I don’t look at anything other than market cap. Then, I go to the balance sheet and parameters, and then check whether the promoter is from a pedigree background or not. These are the three requirements. Even if the promoter has problems due to debt or restructuring, I will not hesitate as long as he has good credit and I get the right valuation. Therefore, evaluation should be relaxed.

Do you have a preference when it comes to market cap?

No, it depends on the risk appetite and the amount of capital I can process. If I pick a mid-cap stock which can make me money, I will go ahead with a bigger investment. I will not invest small money.

What would be your top stock performers?

In 1988, one of my uncles suggested that I buy a Tata Honeywell, which had just been listed. The company was in the ratio 51:49 between Honeywell and Tata. I bought 1,000 shares and got a rights issue on it 35 in the ratio 5:3. Therefore, I got 1,650 shares at an average price of 40-43. In seven years, the stock jumped 760, and in those five-seven years, I could buy my first house. So, the capital that came from that stock was huge. The only mistake I made is that today I only own 275 of them and the price of Honeywell has gone up so much 45,000. The other big stock would be Havells, which has created a lot of wealth and is still in my portfolio. less than 1,000 crores, the company is now worth approx. 35,000-40,000 crore. And I still think they can double their value from here.

Have these stocks contributed the most to your wealth?

Yes sure Too, Ashok Leylandthe one i bought 18 turned out to be a 10-bagger stock for me. I have indusind bank since it was under 100. In the last five years, I haven’t churned much on my portfolio. Due to compliance issue what is being done now is being done through mutual funds.

Is there any sector you are bullish on?

IT took a backseat earlier this year, even though it’s the best excuse for a weak Rupee, and we thought pharma would be a good option. So Sun Pharma and Cipla Became a part of our portfolio. We also realized that banks have very good liability franchises, and larger lenders are gaining more market share, therefore Kotak Mahindra Bank And ICICI Bank Got more space

One strategy that worked for you, and one that didn’t?

The problem is that sometimes you get married to a stock, and even though those stocks go up a lot more than you expected, you hold onto them. But I realized later that if you want to make money and survive in the market, you have to constantly update yourself with the changing parts of your business. So, I think optimization has been my mantra. But, never commit to a stock as there will always be another entry point. If you’ve learned how to make money, you should take home your profits.

Do you invest in international stocks?

When I was with Deutsche Bank, I bought some Citibank stock in a distress sale because of issues with Lehman Brothers. And it proved to be a five bagger over the next three years. After that I have not made any foreign investment.

For how many months do you make provision for an emergency fund?

Capital is not an issue, but I do keep cash in my account. Twenty years ago, however, it was always hand-to-mouth, in the sense that I was always fully invested, not knowing what would happen tomorrow. The idea of ​​keeping cash in my financial planning came only in the last five years.

I have enough cash in the bank right now for at least eight to 12 months.

Are there any lifestyle changes that you made during the Covid pandemic and are now set to become permanent?

I had never imagined that so many people would come on TV during the lockdown, which made me a hero as I was one of the few who said Nifty below 8,000 level. It has put a lot of pressure on me in terms of calling. The second thing, what I learned from COVID, was that it is always necessary to have more cash on hand as this type of emergency has never been seen in history. And third, the reluctance to spend is gone.

What does money mean to you?

Money is a means to an end. I am not a person who is very positive about things. Market has taught me that life and market can co-exist if you know how to balance yourself. So, I’m balanced and modest as far as money goes.

How do you identify yourself as an investor?

I am not such a skilled investor because of the timeline. I am a true Punjabi and I live a king size life. There is no shortcut to earn money and share market is the only way. The main thing in life after 59 years is that I am very passionate about my work, and although it is very stressful, I am having the best time now.

If you want to make money, you have to constantly update yourself with the ever-changing parts of your business.