The Success Story Of Small-cap Czar, Porinju Veliyath

10 Apr, 2021

7 min read

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Success Story of Porinju Veliyath - Smart Money
His knack to pick value stocks of lesser-known companies has earned him the moniker, small-cap czar.

He is Porinju Veliyath, a Kerala based investor and founder of the portfolio management firm Equity Intelligence India Private Ltd. 

If you are an aspiring stock market investor, following the footsteps of successful investors like Veliyath will help you understand how to pick value stocks. 

Who is Porinju Veliyath? 

Maybe you don’t come across his name too often (because he maintains a low profile), but he is one of the most successful small-cap investors in recent time. He has made some striking gains by investing primarily in small companies.

Let’s take a look at his background to gauge why his success story is a matter of discussion. 

Veliyath comes from a lower-middle-class family in Chalakudy village, near Kochi, Kerala. He is a law graduate. However, he started his career as a floor trader with Kotak Securities in Mumbai. Later he joined Parag Parikh Securities, where is worked from 1994 to 1999 as a research analyst.  

After 1999, he moved back to his hometown in Kochi and 2002 founded a portfolio management company. He manages his own portfolio and offers investment advice to other investors. He successfully invested in companies that other investors avoided.

During the stock market bull run between 2013-2018, his portfolio gained exponentially through his investment in multi-baggers.         

Porinju is famous for his small-cap investments. But his portfolio also contains a few large-cap and blue-chip company shares, like Reliance Industries. He is very active on Twitter and shares his investment suggestions with his followers. In 2016, he shared a tweet that Reliance Industries with Jio has the potential to go bullish. 

Veliyath’s investment strategy

Veliyath’s investment strategies can make an interesting study. He is known as one of the best value stock pickers of his time. 

Veliyath is known especially for his ability to pick small-cap company stocks with strong business potential. For example, one of his first investment was Geojit Financial Service, a bad penny stock then. But he remained confident with his investment decision. It later proved to be a multi-bagger stock, generating a multifold return. Following it, Veliyath again struck gold with his investment is Shreyas Shipping. His choice of stocks tells a lot about his investment style. He sees beyond the immediate and predicts the long run.  

Speaking of his strategy, he said, “I buy lesser-known, high-quality businesses to derive maximum portfolio value. I don’t shy away from smaller companies like other ‘knowledgeable people’ do. And I don’t buy a lot of great companies with a clean balance sheet, honest management and clear business visibility. If you invest in such companies, even bank FDs would beat your portfolio returns.”

Blue-chip company shares move slowly as compared to small company shares, which make large swings. 

He invests in future multi-bagger stocks

Porinju is indeed a successful stock picker. His ability to guess future return on stocks is what made him stand apart from other investors. Additionally, he doesn’t mind taking a risk.  When he invested in Geojit finance, it had fewer takers and regarded as a bad-penny stock. But Porinju surprised everyone by investing in it, which turned out to be a successful bet. 

His second purchase was Shreyas Shipping & Logistic, which he purchased as Rs 30 in 2012 and later sold those stocks in 2015 at Rs 839.   

 

He timed the market well and exited on time

Veliyath sold Shreyas Shipping shares at Rs 700 when it reached an all-time high. Currently, the company shares are trading at Rs 271. It indicates how crucial it is to time the market and know when to exit. 

He picked less known companies with high-quality business

He has an eye to identify less known gems in the stock market. For example, he invested in stocks like Gokaldas Exports or Nirvikara Paper Mills, when no one was even aware of them. He focused on the quality of business these companies had.   

He picks honest companies with clear business visibility

Perhaps it is one of the critical aspects of value investing. Veliyath being an ace investor, always preferred companies with a clean balance sheet, honest management, and solid business potential. When he invested in Geojit, he looked at all these qualities only.   

He diversifies

Porinju Veliyath is known as the small-cap czar because his portfolio is full of small-cap company shares. However, he also invests in large-cap and blue-chip companies. Diversification is essential to create a balanced return on a portfolio. 

Porinju Veliyath’s story tells us that there is no one-size-fits-all success mantra for creating wealth in the financial market, and one must find a strategy that works for them.

He chose to walk a different path than other successful investors. When other investors’ portfolios are full of big names, Veliyath looked for ignored gems and bet on their success. According to him, value investing is the bedrock of successful investment in stocks and will always remain so despite the market condition. He emphasised that all sensible investors and value investors. Whether you are a new investor or a seasoned one, taking a few tips from successful investors like Porinju Veliyath will help you build your winning strategy.

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