February 2nd, 2015
Via Value Walk, a sad report on the passing of Chandrakant Sampat, often considered to be India’s value Investing pioneer:
Chandrakant Sampat, an Indian investor passed away at the age of 86 on Sunday. Sampat was a pioneer of value investing in his country.
Sampat serves as an inspiration among investment gurus today in India. During the 1950s, Sampat identified investment opportunities that made him wealthy. He practices the investment philosophy of Warren Buffett; “Rule no. 1: Never lose money, Rule no. 2: Never forget rule number one.”
Parag Parikh, CEO of Parag Parikh Financial Advisory Services (PPFAS) told Forbes, “Whatever I am is because of him [referring to Sampat], he was my inspiration to enter the capital markets.” Parikk considers him as the Warren Buffett of India.
Sampat followed Buffett’s advice to “be fearful when others are greedy and greedy when others are fearful. Sampat was disciplined, not just about investing but all aspects of life,”said Parikh.
Sampat’s greatest contribution to the Indian market
In an interview with CNBC’s Moneycontrol bureau, Ramesh Damani, a value investor and broker at the Bombay Stock Exchange (BSE) said Sampat’s greatest contribution to the Indian market were the knowledge in value investing shared to aspiring investors. According to him, he served as mentor to them.
Damani considers himself as one of protégés of Sampat. According to him, his mentor was first investor in India who understood the powerful impact of compounding on investments. “His investment philosophy as simple; identify great businesses and let the power of compounding do the rest,” he said.
According to him, Sampat sought companies that have potential to compound for many years. Damami emphasized, “What many people do not know about Sampat is that he contributed to the coffers of the BSE through a simple advice that earned handsome revenues for the BSE over the years.”
Sampat advised BSE to charge a fee based on the the number of shares that would be issued by a company instead of a flat listing fee. The bourse makes money every time companies announce a bonus issue or raise capital by issuing new shares.
Factors considered by Sampat in investing
Sampat started entered the Indian marke in 1950s, the time when investors only need check book and pen to invest. His early investments include Hindustan Unilever N.V. (ADR) (NYSE:UN) (then Hindustan Lever) and Gilette India (then Indian Shaving Products). His portfolio was dominated by consumer goods.
When investing in a company, Sampat considers three factors including minimum capital expenditure, at least 25% return on capital employed (RoCE), and a record of paying generous dividends.
In 2013, Sampat told Moneycontrol that he stopped investing because the capital markets became gloomy. At the time, he said,”Today, capital markets are blindly chasing growth achieved through reckless consumption, greed and Fiat S.p.A. (ADR) (OTCMKTS:FIATY) (BIT:F) money.”
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Educated at Yale University (Bachelor of Arts - History) and Harvard (Master in Public Policy - International Development), Monty Simus has lived, worked, and traveled in more than forty countries spanning Africa, China, western Europe, the Middle East, South America, and Southeast & Central Asia, and his personal interests comprise economic development, policy, investment, technology, natural resources, and the environment, with a particular focus on globalization’s impact upon these subject areas. Monty writes about frontier investment markets at www.wildcatsandblacksheep.com and geopolitical pressures in the global agricultural sector at www.seedsofarevolution.com.