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Role models that inspire
ABHINAV Jhunjhunwala, chief of AJ Capital, counts as his mentors his father Amitabh Jhunjhunwala and the founder of hedge fund firm Valiant Capital Management, Christopher Hansen.
The elder Mr Jhunjhunwala is the former vice-chairman of Reliance Capital, one of the largest fi nancial services firms in India. He is widely regarded as the right-hand man of Reliance chairman Anil Ambani.
"My father has always been my role model. He is one of the hardest working and most focused people I know. He believes in the truth of his work. I hope I can live up to that level of commitment one day."
On his stint at Valiant Capital, he said Mr Hanson and then-partner Shashin Shah were among the best investors he has had a chance to learn from. "It was great to see their degree of conviction of what value was, of what was a good investment and what wasn't. Because they had such familiarity with the businesses they had been tracking for years, they knew the external environment mattered less. The degree of work they did to build conviction and their ideas - these were all areas one could really learn from and incorporate into one's organisational culture.
"It wasn't just reading a report to discern a good or bad stock. There was so much more work - channel checks, calls to suppliers, vendors, buyers. Once we were investing in a company that made genetically modified seeds. They made me go to a village in Iowa with a population of 110.
"There is a reason those folks are so successful - their dedication to work and the quality of work down to empirical data points. There was always validation."
A key part of Mr Jhunjhunwala's risk management is what he calls "position sizing", or a judicious upsizing or downsizing of an investment. He does not take on loans for the operating businesses, for instance. "The notion of levering up against noncash generating assets is scary to me. This is more about selectively upsizing. For example, now the insurance business is a series A investment. I will co-invest with new investors because I think the position should be upsized. I have a great deal of conviction in the business based on what I see."
He watches closely the exposures of the firm's public securities portfolio, particularly as the vagaries of political rhetoric increasingly cause market swings. "The answer is to size your position and be very active."
AJ Capital's private market investments include stakes in Appier, a Taiwanese customer analytics startup, backed by SoftBank. Appier's recent round of fund raising include Temasek Holdings' Pavilion Capital. It has also invested in Carro, a used car online marketplace. He says when investing in private companies, he is stage-agnostic. "It depends on the quality of the entrepreneur. If we like them we're happy to participate." W