‘There is no need to blindly follow somebody’: Deven Choksey

Coming from a family that has been into the brokerage business for over a century, Deven Choksey, promoter, KRChoksey Group, is no stranger to money and the power that it wields. A respected and distinguished name in the Indian capital markets for over three decades, the 58-year old has carried the vision of transforming stock brokerage business into wealth management practice. In an interesting chat with bl.portfolio, Choksey shares his investment journey, lessons, insights and experiences. Read on.

Profile: Armed with a distinction in commerce and accountancy with academic training as CA, Choksey has also undergone Advanced Management Development Program (MDP) with specialisation in management of funds and portfolio investments from IIM Ahmedabad. He has played major roles as a member of the committee in digitising market platform with contributions in development of online trading, online surveillance systems and dematerialisation of shares into digital receipt.

Your family has been in the equity brokerage business since 1911-12. Were you fascinated with stocks from childhood?

The very first time I went to our office was during my 10th standard vacation. In those days, everything was completely manual. I think it was the restlessness in me that probably put me into this kind of an environment. My stock market orientation happened during my visits to the office. During vacations, what do you do? So, I started reading, looking at how business was being run, etc.

How did you enter the business of investing?

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My primary interest was always with the investment market. I think this is largely because of the fact that such was my family business setting. So, when I joined the family business after my CA, I immediately wanted to learn a few things, apart from trading on the floor. I was eager to understand how the human investor psychology works. Because of my educational qualification, and also the allure of markets, I immediately got into research. Back then, i.e. late 80s, research was not such a common area of work.

How did you do research in those days?

At that point in time, information was not so commonly available in a structured manner. Actually, the search work had just started then, and that is why we call it re-search. We would get into the field to do information gathering, understanding, interpreting, interacting with people and then communicating the same back to investors. That was the process that we initiated. My IT background helped. I was into system designing and programming. Actually, I ended up developing software. Once you have data inside software, you can easily use the software as a tool for the purpose of doing analytics.

When did your personal investing journey begin?

I started investing when I used my stipend. I picked up an investment in a company where I saw the auditing process from close quarters at that point of time. I put about ₹4,000. Ultimately, it ended up giving me a return of somewhere around ₹1 lakh. It was a multibagger. The company was in the chemical business and it had expanded into a new project. I got convinced that this new project could possibly generate a higher amount of revenue and profit. The company came up with a rights issue to fund the expansion. The stock, which was offered in the rights issue at ₹10, at that point of time was available in the market at ₹8. I made some calculations and they worked. In this kind of journey, nothing is ever planned. It unfolds on its own.

How do you look at management interaction in investing?

Understanding numbers is not a very difficult job. But the understanding of people behind the business is always the key point. At an early stage, I had realised that the people behind a business actually deliver the success that we are enthralled about. Understanding them comes from interactions. It is very important to interact with people. You have to basically keep following up with them and see whether your understanding is getting validated or otherwise.

Have you gone back to the drawing board when things didn’t work out?

Honestly, it’s a continuous process. Let me give you an example. In those days, the media business had opened up. This company was entering regional media space. They were looking very promising compared to their rivals. But what we discovered subsequently was that the media business requires a huge amount of capital. They must have borrowed money and started that business. Subsequently, they failed to sustain because they were without money. So, the lesson was that you have to have deep pockets to sustain in this line of business. Another learning that came was promoters, without capital, when they start operating, put your money at higher risk! We must look at how well they are capitalised, and then invest in that company. Well-funded companies, despite their share of ups and downs, have given rich rewards to investors.

You have been among the few who weren’t bearish on equities during the Covid pandemic. Why?

I think the point I was trying to make at that time was, nothing is going to go down completely, even though the world stopped. For the first time, you saw the entire economy of the world stopping. In such times, one has to keep their nerves calm. This too shall pass. Look what happened thereafter. Not only did we get our capital back, but a fairly phenomenal amount of return was also generated.

Can you tell us your own personal asset allocation?

We don’t have any portion in debt in my portfolio. Whatever little is there is for its liquidity factor. Equity is the dominant asset class in my portfolio. Real estate is for uses such as office or home. But I don’t put money in real estate for rental yield.

With all the craze behind crypto, weren’t you tempted to try?

The technology behind the crypto is far more important than the currency. I had kept the view that cryptocurrency cannot survive and so if you end up investing in crypto then one is going to lose capital. Some people, I think, who took blind risk could have made a huge amount of money but unless they monetised that profit, the same is on paper only.

Who have been the most big influences in your investing journey?

I don’t follow any individual. I have come in touch with many talented individuals in my line of business, I observed them when I thought they had a good style. You can say it is like adding data to better the approach or finetune efforts. But if you ask me, did I follow Warren Buffett? Did I follow XYZ? The answer is no.

Everybody has some different ways to look at every subject. So, there is no need to blindly follow somebody. You may pick up some good qualities out of such people whom you meet. In the early days when I started my career, I came across people like Vallabh Bhanshali and Nemish Shah. I could resonate well with them, because their approach and our approach remained relatively more common. We are more driven by the fundamental facts of the business than speculative. I did not want speculative portions in our portfolios.

What are your thoughts on financial goals?

Everybody wants to reach somewhere in life. My entire style of working is to keep working and everything will unfold. This is what I believe in. You keep working in the direction. I think this is working well for me.

KRChoksey runs twin integrated platforms under wealth management and transaction-based services. Wealth management was your brainchild. What was the trigger for the idea?

I could see the trend emerging. I could sense the need becoming very strong. India started attracting a lot of youngsters into the market. Those youngsters would require the professional services of wealth management. So obviously, we had to be in development, because if you see the future 25 years from now, and if that is something that you want to physically play with, then you can’t be lagging behind. In a journey of 35 years, I think you can very well imagine that nothing happens one day. It definitely happens over a period of time. We took that particular call and have been growing systematically in the area over the last 25 years.