"He took the religion of value investing seriously"

Parag Parikh practiced the hardest aspect of investing — being a contrarian when it is monetarily painful

1954 - 2015

I was in Dubai when I got a call from a friend in Surat early Monday morning, informing me that Parag Parikh was no more. The call left me in a state of complete shock and I was left hoping that this news was just part of a bad dream. Just a couple of months ago, Parag and I were sitting right next to each other at Chandrakantbhai Sampat’s prayer meet. First Chandrakantbhai, now Parag — value investing in India will never be the same again. Parag died in a tragic accident — a full stop used where a comma would have more than sufficed. In accidents, sometimes a moment here or there ends in eternity.

Parag — as I got to know him after my first introduction to him through Chandrakantbhai — was a man who, to my mind, had three facets. One was Parag the entrepreneur, another Parag the evangelist and third, Parag the investor. What defined Parag as an entrepreneur was his entry into the mutual fund arena — a step that was bold, different and, at least in India, innovative. He staked his money and, more importantly, his reputation in what he believed was right. Quantum physicist Werner Heisenberg had once written: “Unless you stake your life, life will not be won.”

Parag made the transition into fund management by burning his bridges in the managed accounts arena. He was outspoken about many of the avoidable challenges awaiting potential entrants in the industry. He was the outsider and he was in the minority but that did not daunt him. 

Then there is Parag the evangelist. His evangelism came out in many forums — the two books he authored, the lectures he gave, the articles he wrote and the value investing meets he organised. He took the religion of value investing seriously. And last but not the least, Parag the investor. Richard Feynman once wrote: “Scientists are explorers, philosophers are tourists.”

He should have added that investors need to be both and the good investors know when to explore and when to tour. I rarely discussed any investment ideas with Parag, although Chandrakantbhai Sampat played a defining role in both our lives, having stressed the power of compounding money, the virtues of patience and long-term focus, the need to be tourists when the crowd becomes explorers and the need to become explorers when the crowd becomes tourists. Parag explored in detail why it is so difficult to do so. His portfolio allocation policy is an indication that he practiced the hardest aspect of investing — being a contrarian even when it is psychologically and monetarily painful in the short term.

Parag preferred in later years the cheaper valuation of FMCG companies internationally to those in India. He was not entirely convinced about the higher return on capital employed and the higher growth compensating for higher valuation. I was sure that Parag would be there to see the terminal value, say, ten to fifteen years later. Unlike for a scientist like Einstein, to whom the distinction between past, present and future is an illusion, to investors, it is the most important reality. Philosopher Henri Bergson wrote in 1927: “One must think like a man of action and act like a man of thought.” Parag Parikh’s life was a testament to that statement.