Decoding Sudip Bandyopadhyay's formula of selecting quality stocks

An entrepreneur. A venture capitalist. A business manager. A stock market veteran. Sudip Bandyopadhyay has donned many hats in his career and has three decades of experience in various areas of finance and financial services. As Group Chairman- Inditrade–JRG Fincorp, his vision is to ensure the company actively participates in nation building. Bandyopadhyay is regarded by many in the financial world as a dynamic leader known for his knowledge, insight, and vision which make him an extraordinary investor. An admirer of Oracle of Omaha, Warren Buffett, he believes in investing in stocks based on strength of a company and its future potential.

Money9 spoke to Bandyopadhyay to understand the philosophies that made him a successful investor.

Edited excerpts:

Q. What made you embark upon your professional journey in the financial service industry?

Bandyopadhyay: Financial markets have attracted me from my college days and during my CA articleship I started getting involved in finance and capital markets. The attraction intensified over the years and my assignment with financial services division of ITC Limited enabled me to participate closely in the making of the first diversified financial services business created by a large Indian corporate.

Q: How does your typical workday look like and what are your hobbies?

Bandyopadhyay: I start working from around 9.30 am every morning and I am normally at my desk in my office till around 7–7.30 pm.  My hobbies include reading newspapers, journals and books covering a wide area of interest which amongst others, includes finance, financial services and the corporate world.  Of course, I like watching cricket, football and enjoy movies.

Q: What is your investment philosophy when it comes to picking up a stock?

Bandyopadhyay: My investment philosophy is strongly based on fundamental research and relies on the strength of a company and its future potential.

Q: What do you give more weightage to – conviction or analysis?

Bandyopadhyay: While analysing an investment opportunity, I focus on the management quality and track record; the past performance; future plans and potential and the industry outlook. Out of the above, I give the highest weightage to the management quality and track record.

Q: What gives you the confidence to hold on to stocks that have turned into multi-baggers?

Bandyopadhyay: The decision to continue holding a stock will depend on the future potential growth of the company and the industry.

Q: Do you believe in the philosophy that certain blue-chips are to be held for a lifetime?

Bandyopadhyay: One can hold bluechip stocks for a long time and pass on the same to the next generation.  This can be similar to what we do for our properties, jewellery and other valuables.  I don’t think there is any difference between other asset classes and stocks in this matter.

Q: What lessons have you learnt from your investment mistakes?

Bandyopadhyay: Failure to accurately analyse the management quality has led to erosion of wealth in many occasions. Unfortunately, earlier available information used to be inadequate and appropriate analysis was sometime difficult. With significantly improved news inflow, it is now possible to better analyse and understand management quality and track record. I prefer to cut my losses and move on, rather than holding to the shares where error in decision making is apparent.

Q: Who is your investment guru and which books are you reading currently?

Bandyopadhyay: I like Warren Buffet and his style of investing.  However, I read wide range of books. Currently I am reading books written by the Noble laureate economist and father of behavioural economics – Daniel Kahneman.  His book ‘Noise’ is what I am currently reading.

Q: Once the second wave settles down, which sectors will lead and should one go bargain hunting?

Bandyopadhyay: We believe that once the second wave subsides, domestic economy-focused sectors should do exceedingly well.  Investors should look at domestic infrastructure, construction and related stocks, at this point in time.  There are excellent stocks available even now at reasonable valuations.

Q: As an individual what would you prefer direct stocks or mutual funds? 

Bandyopadhyay: As an individual who has been in the market for 30+ years, I invest in stocks directly. However, working through PMS or mutual fund route may not be a bad idea for individuals who are not themselves focused on the market.

Q: What would be your advice to investors?

Bandyopadhyay: For an individual investor, it’s extremely important to either do proper research himself, or seek expert advice before investing in stocks.  There is no substitute to diligence in the matter of investment. The next point to note would be to avoid trying to time the market and plan to be in the market for sometime. The last advice would be not to fall in love with any stock if it becomes apparent that the decision to invest was incorrect. Cutting losses and exiting is important in such circumstances.