Chandrakant Sampat - The Warren Buffett of India

Chandrakant Sampat was known to many as the Warren Buffett of India  and was regarded as a veteran stock market investor. The 82-year-old  investor lead an active yet simple life that included daily jogging and  yoga exercises. Surrounded by books and periodicals at his Worli  apartment bedroom, Sampat hardly looked like one of the most successful  investors in the country.

Sampat died at the beginning of 2015 aged 86.

He did not earned his coveted title for nothing. Starting from  scratch after quitting his family business in 1955, he has been  investing in equity for more than four decades, carefully picking stocks  of companies like HUL and Nestle..

“There was a time when I was 70% into the (equities) market,” he  said, shaking his head. “Times have changed.” Of late, the veteran  turned bearish and put most of his money into cash and cash equivalents.

Starting almost from scratch, simply by picking stocks and companies  for investment, he was often referred to as a guru. He came across as  being obsessed with moneymaking. Nevertheless, he was amongst the most  objective and emotionally detached persons you are likely to meet in a  lifetime. Moreover, that includes detachment with money. His emotional  intelligence especially his ability to defer gratification was probably  his most important strength.

An autodidact, he was openly abhorrent of the educational system in  his country, and was often cited as saying “knowledge is that which  liberates and not captivates”. That in fact was a translation of one of  the shlokas from the great Indian epic, The Bhagwad Geeta, much of which  he recites verbatim. “Markets and mistakes are the best education. The  conventional education just closes the mind”, he declares.

The one man who has had a lasting impression on him is none other  than the greatest management theorist of all time, Peter F. Drucker. “If  we achieve profit at the cost of downgrading or not innovating, they  are not profit. We are destroying capital. On the other hand, if we  continue to improve productivity of all key resources and our innovative  standing, we are going to be profitable not today but tomorrow. In  looking at knowledge applied to human work as the source of wealth, we  also see the function of the economic organization”, he says, resonating  with Drucker.

Taking a clue from Drucker, every company is measured on a rigorous  scale of productivity and innovation before forming a part of his  portfolio. It does not end there. Every constituent in his portfolio was  continuously challenged. Any stock that fails to measure up well  against his metric was given the boot. He gets every rupee to sweat for  him.

Sampat was one of the most successful investors in India. Starting  from scratch, Sampat’s obsession with wealth, coupled with a strong  spell of patience and precision, has helped him build a fortune in the  Indian equity market. Nevertheless, these days, he is not touching  equities – not because he was tired of making money but due to high  risks in this area.

Chandrakant Sampat: Investment philosophy

“Pick up good companies with good managements when their share prices  are at an eight-year or 10-year low. Alternatively, if you still want  to do something, buy good companies that are 40% lower than their  52-week high. I will buy only those companies that are in a business  that even fools can understand, have very little debt, have free cash  flows or do not have much capital expenditure, which is nothing but  deferred cost,” he said
He was a big bull on FMCG stocks (Gillette, Proctor etc.) and MNC  Pharma. A Firm believer that free cash flows are the only thing that  matters.
What is Sampat’s secret to good investing? Pat comes with the answer:  Invest in a business you understand, the company should have either  zero or very little debt, the share should be available at a P/E ratio  of 13 to 14 times the current year’s earnings and lastly, it should be  available between 3.5% and 4%. “It is that simple!” he says. This is all  he does; he says, no more research. Follow these golden rules, and you  can be as good as he can, he concluded.

Chandrakant Sampat: Quotes
“To be a good investor all one has to do is dream”

“All you need is a cheque book and a pen”

“Knowledge is that which liberates and not captivates”.

“Markets and mistakes are the best education. The conventional education just closes the mind”

“If we achieve profit at the cost of downgrading or not innovating, they are not profit”

“Coke and Gillette have been around for many years, and they are  likely to be around for many more. I cannot say that with any degree of  certainty for technology, where the rate of obsolescence is very fast,  where things change at warp speed”

“De-bureaucratize the whole process of Foreign Direct Investments  (FDIs) with only one condition, the Multinationals who seek entry into  this country must get themselves listed on the Indian bourses”

“Experience is not an asset. The future is going to be entirely  different and the past can provide little clue about the future,”

“I have seen nothing like this before. Capitalism seems to have  gone old. It is finding survival difficult. Keep away from the markets,”

Chandrakant Sampat: Bio, Investments, Articles, Quotes - Resource Page