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Many of you who have read our letters in the past would now be aware that we believe Prashant Jain will continue to be one of India’s best public fund money managers for a long time to come. Though his returns exhibited cyclicality, he was the No. 1 fund manager across time periods when he handed over the reins to the new CIO. It’s interesting to know that, only 2 years back, all his funds were in the bottom decile in terms of performance (so much for looking at last 1-2 y track returns and investing in funds).

We were reading his last investment letter he wrote to investors and partners. Below is a quick summary of our takeaways from his letter.

  • Over a 30Y track record, 80% of his gains came from 20% of his investments. The problem is one never knows which 20% its going to be (goes to show position sizing and risk management are more important than just stock selection).
  • Over a 30Y track record, it was 5 decisions that drove a bulk of his returns. Do note that he does not speak of 5 stocks but 5 key decision-making periods from a sector/rotation perspective.
  • Finally, acknowledging the role of luck in the outcome, as much as the role of process.

For those who are interested to read the full letter: one can click the link here – https://drive.google.com/file/d/1MEWCZ8aDzWLzQK1VaHvSygurOIdlT-Yz/view?s=08