Early Life

Porinju Veliyath was born in the middle class family of moderate means in Kochi, Kerala, India. Growing up in an old fashioned world where discipline, work, and education developed his perspective on life. Investigating and studying the business and economic world was a strong and natural passion of his in his youth, having little or no access to the financial markets.

He qualified his school in Kerala and got further education in commerce. By his interest in acquiring wealth and the workings of business he was stimulated to learn about the trends of the stock market on his own. But, in contrast to many investors who were from families with ample financial resources to learn from, Porinju was one who learned to invest via self-learning, observation and hands-on experience.

His youth instilled patience and perseverance in him. His conservative and value investing style was greatly influenced by his limited finances as a youth.

 How they got into the stock market

Porinju Veliyath had joined the stock market in the 1980s. He became an accountant and finance specialist, working then in the accounting and financial services industry, before moving into equity research and stock trading. His first experiences looking at financial statements and looking at business performance allowed him to be confident in analysing businesses.

He then shifted his base to Mumbai, the financial hub of India, to further immerse himself in the vibrant stock market environment. In this time period, he was engaged with brokerage firms as well as dealing with traders, analysts and institutional investors extensively. Such experiences honed his market psychology and valuation theory.

With little money, Porinju started investing. His cornerstone approach was to seek out overlooked businesses they could acquire for less than their worth. He thoroughly examined both balance papers and the quality of management and the future prospects of the business. His disciplined investing began making good money over time.

In 2002 he started Equity Intelligence India Pvt. Ltd., an investment management company. In this platform, he gained his power in the investment community of India and was recognized for discovering multibagger stocks that are not recognized in mainstream circles.

Biggest Investments

Porinju Veliyath made his name by investing in small-cap and mid-cap stocks with a great turnaround story. He made some important investments in manufacturing, engineering, textile and financial services firms.

Among the many conversations he has had about his investments is the one on Geojit Financial Services. He saw the growth potential of the company from an early stage and prospered as the company grew. In times when the market sentiment was not that good, he also invested in enterprises like Shreyas shipping, Kitex Garments, Heritage foods etc.

He was a value investor who was interested in businesses that were overlooked with good fundamentals. He preferred companies, which traded below their intrinsic value, rather than chasing fashionable sectors. A large portion of his investments paid off at tremendous long-term gains because he arrived at a time when institutional investors were not yet to the fore.

Porinju became the name of a value investor interested in turnaround stories. Frequently bought when he was afraid, and sold when the prices were too high.

Failures and Lessons

Like every successful investor, Porinju Veliyath has had his fair share of failures. A number of his stock selections failed because of flawed management, economic downturns, and/or business forecasts.

Some investments were unsuccessful due to poor implementation of the business growth plans by the management teams. In other instances, market conditions turned out to be unexpectedly unfavorable, affecting the profitability of sectors. Whatever a company does, not all are undervalued or destined to be successful.

These mistakes resulted in the realization of his need to be risk-management and diversified. He stressed the importance of never getting emotionally attached with stocks and said that traders should always stick to logic. He also learned that a good management is as important as a good valuation of the money.

Herd mentality was a common theme in the comments of Porinju. He stated that investors tend to lose money following the “buzz of the market” rather than using their independent research to decide whether or not to invest. His failures only fueled his philosophy of patience and discipline as the key to long-term success.

Investment Philosophies

Instead of following the short-term value investing approach, Porinju Veliyath adopts a traditional value investing style based on principles of long-term wealth creation. He thinks markets often put a low value on companies when they are frightened, when they are pessimistic, or when the business isn’t doing very well in the short-term.

He takes pleasure in investing in businesses with great fundamentals that are trading at reduced valuations. Before investing, he examines a company’s balance sheet, cash flows, management and future prospects.

Contrarian investing is Porinju’s strong support. Not infrequently, he purchases stocks in times of panic when the rest of the investors are shying away from the stock market. He said that it’s during uncertainty and pessimism that the best opportunities arise.

He contends that retail investors also have an edge over large institutional investors since they can get in on a smaller company before it is widely known. He advises investors to make their own decisions instead of solely depending on the market and TV news.

Net Worth Growth Journey

Porinju Veliyath has amassed his fortune slowly over a number of years with his investing strategy. As a few of his original investments grew over time, his net worth also grew substantially.

His stock portfolio has seen significant gains during market cycles in the mid-’00s and more recently when he invested in small-cap stocks. As his reputation continued to rise, investors flocked to his portfolio management services, enhancing his financial footprint.

Market corrections periodically caused a fall in portfolio values but Porinju always had the long term view. He was always willing to plow back profits into new opportunities, and to protect his capital during times of market extreme.

His experience has shown that true wealth building through sustainable methods is achieved through patience, research, and conviction, rather than chasing quick profits and trading frenzies.

Some helpful tips for those who are new

The beginning investors should invest early and should be patient enough to hold their investment irrespective of market cycles, says Porinju Veliyath. He advises investors to master accounting principles, business analysis and valuation techniques first and then commit big money into a business investment.

He advises novice investors to never jump on the stock advice bandwagon or follow anyone’s recommendations on social media. Rather, he says to study businesses separately and know the risks in various investments.

Additionally, he values emotional restraint. He says that most investment misjudgements are made with fear or greed. Saying this, those who aren’t rattled by volatility, can probably deliver better long-term results.

Torsten Lercher (aka “Porinju”) is a recurring voice on the web that warns young investors against taking on too much debt to invest in the stock market. His philosophy on investing is that when you invest with discipline and realistic expectations you will achieve sustainable wealth over time.

Famous Quotes

“The market rewards patience, conviction, and courage.”

“Buy when pessimism is high and valuations are low.”

“Small caps create great wealth when chosen wisely.”

“Independent thinking is the foundation of successful investing.”

“Temporary fear creates long-term opportunity.”