Maheshwari, who grew up in Kolkata, is a co-founder and partner at Basant Maheshwari Wealth Advisers LLP, a Sebi-registered portfolio management company.
“My investment journey started when I was in college in 1991 during the Harshad Mehta boom and I saw prices of stocks doubling in a matter of days," he told Mint. Maheshwari bought companies that were valued cheaply after going through stock quotations in newspapers, and held them for short time periods before selling them. He made some money but lost some too. Maheshwari admits that he kept losing money in the stock markets in the first eight-nine years . “I believed that stocks would make me rich but I just didn’t know how," he said.
By the time the dotcom bust was over in 2001, he was back to square one— with no substantial wealth creation to show for his 10 years of investing.
Maheshwari, who studied cost accountancy, then turned to coaching to support himself. “I taught anything that people wanted to learn—tuitions for accountancy, MBA and even stock market courses —whatever could support me," he said. And he ploughed all the money made from taking tuitions back into the stock market.
Within a few years, his fortunes had turned —he bought his first multibagger stock ‘E-Serve’ in the early 2000s. And its price rocketed up six times.
“Till then I didn’t know what I was doing. I was buying stocks that were crashing, thinking they will make me money. My approach changed when I came across the writings of Warren Buffett, Peter Lynch and Jesse Livermore," he said.
By 2002-03, things were back on track for Maheshwari, and by 2008 the stock markets had earned enough money for him to live on his investments alone. One of his major multibagger stock picks was Pantaloons.
However, the Great Recession had some lessons in store for him. Maheshwari saw his fortune collapse and then 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 him another great buying opportunity—Page Industries (the Indian manufacturer and retailer of innerwear, loungewear and socks) in 2009.
“I was wearing Jockey at home, and the Peter Lynch principle—invest in the products you love—lent support to my decision to buy," he told Mint. This, however, was no substitute for careful analysis. And so, Maheshwari visited Page’s manufacturing facilities and did some detailed homework. He spoke to the global chief executive of Jockey, and worried often about the possibility of Jockey terminating Page’s license. “The promoter of Page used to sell all the time and this was a red flag. But I stuck on," Maheshwari said.
In 2014, a new system of rules for investment advisors was put in place by market regulator Sebi and Maheshwari decided to change his business. He wound up the advisory practice and launched a portfolio management service (PMS) in 2015. Soon after, in 2017-’18, he bought his next set of multibagger stocks Bajaj Finance and DMart. “I have always had a concentrated portfolio. No more than 10 stocks. I also cap exposure to a single stock at 30% of my portfolio," he said.
These have tended to be small-caps but Maheshwari feels that this route to wealth creation is now closed. “You don’t get cheap small-caps anymore. Private equity funds have already bought them. What I mean is that you cannot expect a 30% CAGR from small-caps anymore—they will still give you reasonable returns," he said.
Maheshwari has also launched a portfolio on Smallcase with 12 stocks and he invests ₹10 lakh of his own money in it every month. Maheshwari says that he personally buys and sells the same stocks as his PMS, though he does not do the buying and selling through his PMS.
He invests nearly 100% of his money in stocks and magnifies this allocation by taking on some debt so that it is ‘more than 100%’, he says.
Maheshwari does not invest in real estate or gold, except for a few stray 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 forth by financial planners of a diversified portfolio will ensure that you cannot retire before 60," he said.
He owns a few international stocks, most notably Tesla, which he bought before 2020 and again this year. “You have to actually drive a Tesla to understand the potential of this company," he told Mint.
Maheshwari’s extraordinary journey is difficult to replicate. He has taken huge risks with his finances – risks that would devastate small investors. He has experimented—buying Reliance Industries in 2020 and metal stocks in 2020-21, with a one-year horizon.
“We played the liquidity momentum but now we are back to our old framework of buying stocks for 3-4 years," he told Mint. He invests money with the seriousness of a professional rather than the placidity of a part-time investor. “I don’t look for 12-15% kind of returns. I expect a lot more from my buys. Don’t buy stocks just to beat inflation. You might end up losing 40% just to protect yourself from an 8% inflation rate," he added.
Maheshwari says he does not aggressively promote his PMS and does not want to start a mutual fund.
“When markets fall, clients demand an explanation. If I myself don’t know what’s happening, then what am I going to tell them," he said.
“New age tech stocks which are not burning cash will rebound," he said, mentioning that he is keenly watching Nykaa.
Wealth to Maheshwari means peace, security and comfort – even as he seeks aggression in his investing and elsewhere. “I travel to countries around the world and drive around there. I tend to drive fast," he adds.
