He is one of the oldest hands in the business, having spent nearly 17 years in different roles as an analyst, a hands-on fund-manager and now a super fund-manager, but going by the strongest conviction of AK Sridhar, the chief investment officer at the country's largest mutual fund, small investors who approach the market directly will always be at a disadvantage.
"I don't invest in companies, I invest in people," says the easy-going, 45-year-old former audit officer at PriceWaterHouse, still one of the most easily accessible people in the hectic fund-manager circle.
For Sridhar and his team of eight fund-managers at the country's largest mutual fund house, investing is all about good judgement, and unlike most others, these are less-often made in front of a computer screen.
Instead, you are likely to find him and his team take life's most crucial decisions while chatting over a warm cup of coffee somewhere in a new, spartan company canteen set up in the backyard of nowhere where some new wannabe Ambani has decided to start his Odyssey.
"All the figures and facts and research can only tell you where opportunity may crop up, never whether the company you invest in will successfully take advantage of it," says this father of two girls who believes it is easier to be in the right place at the right time than to ring the bell at the right moment.
"While numbers and analysis can narrow down your search to a few sectors, they can never lead you to the door-step of the company," Sridhar, who has a disdain for 'flavour-of-the-season' investing, adds.
He and the 30-strong team of fund-managers and researchers under him, have evolved their own method of zeroing-in on good companies - number-crunching followed by personal interaction.
"We have never invested in a company whose management I, or any of the other fund-managers have not personally met," says the chartered accountant from Chennai, who accidentally ended up in finance after he failed to get into his chosen profession, Engineering.
"It does not take much time for us to figure out if he will deliver or not. In fact, a two-hour chat is the maximum you need to figure out."
Once the 'prey' is before him, Sridhar looks for two things: "First is 'will this guy crack under pressure?' Does he have the grit to keep going when things turn against him and his company, because if he cracks under pressure, everyone will lose their money.
"The second, as important as the first though perhaps a little more subtle, is whether he is the kind of person who will share. You will find a lot of people who behave quite competently when the going gets rough, but will start exhibiting cranky behaviour once the company starts hitting profit and delivers riches.
"It is very important that the person be honest and just enough to share the rewards with people who shared the risks with him. Usually, this is ascertained by their past record, besides the personal interaction. Sometimes, we call up his business associates or a friend in the industry circle, it is really difficult to hide your track record," he says.
So, does that mean that retail investors, who do not have the wherewithal to personally meet the promoter of the company he wants to invests in, are going the less-than-perfect way?
"The last one year has been an exception," he says, "practically anyone who has made any investment has made money. But I think, with the markets changing, more and more people will go the institutional way.
"There will always be people who invest based on trends and fashion. Perhaps the market needs them too," he adds philosophically. Having risen through the ranks and tried his hand at practically everything, Sridhar says he still longs for the certainties of his research days.
"Being a fund-manager and being researcher is fundamentally different. With research, your job is clearly defined, you go and meet the company-people, talk to them, run the numbers and give in your report two days later. Nobody can argue with you, those are the facts."
"But when you are a fund-manager, there are no certainties or facts to which you can appeal to, your success is in the hands of thousands of profit-seeking entities who together constitute the market.
"No matter how meticulously you may have done your research, no matter how convinced you may be about the management's ability to deliver, the market may still take a different view and you can do nothing about it.
"The wisdom of the market is the combined wisdom of thousands of individuals, all of whom want to make money and some of who you may not think much of, but whether you like it or not, the market is always right," he says.
Though not responsible for the day-to-day operations of the funds, Sridhar still feels the crunch in his role as a guide to the managers below him.
"The toughest moment in a fund managers life is when the markets just refuse to recognise the virtues of the companies he invested in... when, despite waiting and waiting, the price of the stock remains stubbornly rooted to the ground. It riles you completely.
"I still get people walking into my office confused and as a guide, my job is to sound confident and betray no sign of confusion or sorrow," he says. But for all the 'compounded tension' of eight fund-managers on his shoulder, this sprightly 45-year-old is not the one who nurses secret ambitions of a retirement in bahamas.
"Partly it may be the fact that, when your job itself is to give energy to others, you get energised yourself. Anyway, I certainly don't want to take a break to an idyllic island or anything. I think I will keep on managing people and places, whether it is here or somewhere else," says the accidental fund-manager who is still a puzzle to his middle class, largely "engineering-background family" in Chennai with his unconventional work-hours and ways.Do you want to discuss stock tips? Do you know a hot one? Join the Stock Market Investments Discussion Group
