Stories have been one of the most interesting attributes of a human life, we born & die with nothing but stories, being a father of 2 daughters & Entrepreneur storytelling Is the one attribute I have learnt, we all are fantasized by the stories happening around in Investing World, and I have tried to pile the stories which are close to my heart, which are related to Finance, Investing, we all can learn from and make the most of it.
“Charity begins from home” as let me take the 1st story which is the closest to my heart and it’s my Dad’s Story, I always heard stories of people who got Infosys, Reliance, Wipro shares from the cupboard, where the father or forefathers invested and turned overnight Millionaires, I in my wildest dream never expected this to happen with me, my dad has been one of the most conservative investors I have ever witnessed, he doesn’t like to lose a penny and so he had always preferred a BANK FD (that too PSU’s only) over any investments, his simple philosophy is to live a modest life, and have passive income higher than the expenses he needs, he still doesn’t use an AC or a Car.
In 1992 he had to take 1000 Rs. from an acquisitive, but that person gave him 100 Shares of Aarti Organics (now Aarti Industries), which he kept aside, as in the 90’s to track stock price was not easy, he kept for years just as a dead investments where he was getting small dividends and he was all happy about, that was the only Shares he had old over the years, and he never told anyone about, as because he didn’t even expect any returns out of it.
In 2010 when we had some family gathering and my dad asked me whats the price of Aarti Organics? And I was like why? he told the whole story, I saw the price was 20 rs. and I was like its worth 2000 Rs. so we both didn’t take any interest in it and just bypassed the conversation, but in 2016 he called me again to ask that he has not received the dividend for this year, so what he should do, I told one of my team members to check in the case, and we found this:
On date 100 shares today has turned to 2400 shares, and the price is 1000 rs. i.e. 24 lac. With nearly 30 to 40k Dividend i.e. an average of 100% returns only by dividend YOY (Year on Year) when I told that to my dad, he never believed it, but finally, the fact was the fact, so the CAGR Return comes to 32% in last 28 years, not including DIVIDEND Income, Whooooooooping right??
This are some interesting fact of Aarti Industries (this chart is Split, Bonus, Dividend adjusted Chart):
- For the 1st 10 years, the price was the same, so if he would have counted on every year’s interests he would have sold it for sure, as Bank FD was giving above 12% return year on year.
- Till 2013 i.e. good 20 Years there were no major returns in the stock, the major return came in last 7 years from 40 to 1000, the rule of compounding played a very important part over here.
- In these 28 years, everything happened, in the world, scams, government change, war, etc. but eventually the if the company did well it had to appreciate.
What’s the moral of the story?
- There are only 2 people who make money in markets “Duffer & Disciplined”, my dad could be both, but I believe this was a piece of sheer luck that outplayed him.
- He could have invested in junk stock and today it would be just papers without value.
- One should never invest like what my dad did, betting of luck vs hard work and intellect.
- There are many companies which get to 0 and very few like aarti which turns to a hero.
So what’s the status right now?
We have still in physical share, will we exit if the company stops growing? YES, we will, as the focus is not to fall in Love with the Company!