For Soumya Malani, born in a Kolkata-based Marwari family, books on investment were a bigger attraction than parties in his teens. But when he says, “At 21, I was 10 years too late to become an investor,” you realise that he is actually a dyed-in-the-wool investor with a deceptively boyish charm.
Malani was one of the state toppers in secondary and higher secondary examinations.
He pursued CA and CS where his merit showed through and he secured all-India ranks. But he left the courses midway and completed MSc in accounting and finance from London School of Economics.
Malani thinks one must study hard if one wants to build a fortune early in life.
“If you want to get richer in the early years of your life, study hard, make a plan and dream big,” he would say.
Pointing towards himself, he adds, “The idea was always to gain as much knowledge as possible in the field of accounting and finance. I was always motivated by a thirst for knowledge. The idea of accumulating degrees never motivated me.”
Like a meritorious student, Malani has come up with a formula to spot a multibagger.
He believes that multibagger stocks have some common traits. Any stock that has the following combination packs potential to emerge as a darling of the markets.
Malani’s formula: Visionary management + scalability + pricing power + tailwinds + high growth + higher incremental ROCE + low equity + under ownership + leader in a niche area = Lethal combination for a multibagger.
Malani followed this formula to spot multibaggers that changed his life. These are Avanti Feeds, Bharat Rasayan, Apollo Tricoat, Minda Industries, Ajanta Pharma, Laurus Labs, Acrysil. These stocks as well as several others over the period of time have contributed massively to the growth of his portfolio.
Malani carries the stamp of a student during the entire conversation. “Losses are like tuition fees that every trader has to give to the market to learn the art,” he says with a twinkle.
“Mistakes cannot be avoided altogether but they can definitely be reduced if one is taking full responsibility for his results and is making a conscious effort to improve,” he adds.
Malani puts an emphatic no to blindly copying others. “Learn from others but never copy them,” he says. It is important that new traders first understand themselves better and then trade, accordingly.
Fidelity’s famous money manager Peter Lynch believed in nimble footedness. He used to think that individual investors had an inherent advantage over big institutions since the former could invest in smaller companies that large investment firms could not, or would not, venture to put their money in.
Malani swears by Lynch’s two books One Up on Wall Street and Beating the Street.
Mark Douglas’s industry classic Trading in the Zone and American entrepreneur William O’Neil’s How to Make Money in Stocks and Trading in the Zone are two other books that impressed the 30-year-old.
Malani’s sense of financial freedom does not have anything to do with traditional common possessions. He keeps thinking about the best businesses that he can own in future.
“My concept for financial freedom has been owning the best businesses in India with the most efficient management and teams running them at their most favourable time,” he says.
As for amassing wealth, he has achieved it before the age of 30, an age when most make their initial investments to save taxes under 80C of the Income Tax Act.
The boy who used to be intrigued by the reds and greens bleeping on the computer screen and his grandpa frequently glancing at them has come a long way.
With his dreams of owning best managed companies, he might just be a desi Warren Buffet in the making.
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