Retail investors often look to superstar investors for insights on which stocks and sectors are worth investing in. Some even invest in shadow portfolios to follow the strategies of these investors. In this edition of Chart of the Week, we analyse top superstar investors’ net worth over the past four quarters using data from Trendlyne’s Superstar investor dashboard.
Despite the Indian equity market’s high volatility, the net worth of most superstar investors rose over the past year.
The Indian Volatility Index, Nifty VIX, saw significant fluctuations and increased by 7.6% and 13.5% in December 2022 and January 2023, respectively. This heightened volatility and the muted performance by the Nifty 50 led to many superstars registering negative returns in Q3 and Q4FY23. The Nifty 50 fell by almost 2% in each quarter during this period.
Superstar investors’ winning formula: low-debt stocks with high returns
Top holdings drive superstar investors' net worth growth in the past year
Despite the high volatility in Q3 and Q4FY23, the one-year change in most superstar investors’ net worth has increased significantly overall. Their strategy of staying invested and adding investments when markets fell, has helped most superstar investors’ net worth grow in the past year.
Rekha Jhunjhunwala leads the pack with a 209% surge in her net worth. This steep growth is largely due to inheriting her late husband Rakesh Jhunjhunwala’s portfolio and consistently increasing her stake in Titan. In addition, Titan and Tata Motors, her top two holdings, have risen by 24% and 57% over the past year.
An interesting trend among these investors is their preference for companies with low or no debt. For instance, Vijay Kedia’s top three holdings, Atul Auto, Tejas Network, and Elecon Engineering Company, which form half of his portfolio, either have minimal debt or are debt-free. This strategy of combining low debt with high revenue growth has yielded results for him.
Mid and small-cap stocks, known for their higher risk-reward ratio, have delivered high returns to investors like Kedia. Two of his top three holdings have risen by almost 100% over the last year. Kedia’s net worth increased by 65% and 40% in Q1 and Q2FY24, respectively. Overall, his portfolio has grown by 88% over the past year, making him the second-best performer after Rekha Jhunjhunwala.
The portfolios of many superstar investors are dominated by stocks from sectors like retailing, banking and finance, and textile apparel. More than 70% of these portfolios have exposure to these sectors. The average revenue growth for the top holdings of Ashish Kacholia, and Anil Kumar Goel over the past three years has exceeded 100%. Consequently, their net worth has increased significantly, by 38% and 35%, respectively, in the past year.
Monish Parbai and Nemish Shah have seen moderate growth in their net worth due to the subdued performance of their top holdings like Sunteck Realty and Lakshmi Machine Works.
Sunil Singhania’s portfolio has 28 stocks spread across sectors like software and services, metals and mining, and consumer durables. Two of his top three holdings have risen by over 100%, contributing to his net worth rising by more than 30% in the past year.
In contrast, two superstar investors, Dolly Khanna and Radhakishan Damani, have reported a decline in net worth over the past year. More than 95% of Radhakishan Damani’s portfolio was invested in Avenue Supermarts which fell by 8% last year. Dolly Khanna, on the other hand, cut her stake in several holdings in Q3 and Q4FY23, leading to a fall in her net worth.
Superstar investors are not immune to market volatility. But while their portfolios fell in Q3 and Q4FY23, in line with the broader market, have bounced back strongly since then.
