Prasanth Jain - Farewell : Not so great

One of India's longest serving fund manager Mr.Prasanth Jain quit his job in July 2022. 

In the last minute I got a message that there is a zoom meeting which will be addressed by Mr.Prasanth Jain for one last time at HDFC Mutual Fund. It was scheduled by 4pm or so - if I recollect right. I was right there on time. And the meeting ended in flat 15 minutes. 

And a month later the fund house 'released' a 'farewell' letter writtend by Prasanth. For a person who has created so much wealth for investors, for a fund house which sold all its funds saying his name, it was indeed a shabby farewel. 

Anyway - thought of posting this letter today for following reasons:

1. is indeed a treasure trove of information.
2. Another fund manager - from another AMC has also resigned and he has also posted a farewell letter. Before I post Pankaj's letter - I thought it is right to post Mr.Prasanth Jain's letter.

Here's an extract from the letter where Jain shares his key learnings:

a. In my experience, efficient markets hypothesis does not hold true, especially over short to medium periods. Markets can be driven by emotion and herd behaviour for extended periods

b. Sizing is very important. Any portfolio will have its share of big winners, winners, losers and big losers. In my case roughly 1/4 were losers, 1/100 were big losers, 1/20 were big winners and the rest were winners.

c. The data above in (b) highlights what Warren buffet has famously said – Rule no 1 don’t lose money, rule 2, don’t forget rule no 1. I have made more mistakes of omission than commission – some prominent missed opportunities were Asian Paints, Bajaj Finance, Eicher, Kotak Bank, Divi’s laboratories, etc., but successfully avoided the long list of businesses that caused large and permanent loss of capital.

d. Markets are reasonably efficient over long periods. The duration of mispricing or inefficiency can vary from several quarters to several years. It is important in this period to stay the course and remain solvent (for a mutual fund manager this means to retain the job / fund).

e. Equities are a generous asset class. The tailwind of a growing economy and growing companies overshadows mistakes of timing and security selection in diversified portfolios in most cases over long periods. The key is patience to stay invested for long periods.