How to bet big and be prepared for a longer than anticipated holding period? Amit Goela explains

Amit Goela, Partner at Rare Enterprises, who worked closely with Rakesh Jhunjhunwala, believes that patience and commitment are important while investing in beaten-down blue-chip companies, even in the face of prolonged periods of stagnation and frustration.

Motilal Oswal, a broking firm, has released its 29th Wealth Creation Study, highlighting the concept of wealth generation through ‘Bruised Bluechips’. CNBC-TV18 engaged in discussions with Raamdeo Agrawal, Chairman and Co-Founder of Motilal Oswal Financial Services; Amit Goela, Partner at Rare Enterprises; Anish Shah, Managing Director and CEO of Mahindra Group; and Akhil Gupta, Vice Chairman of Bharti Enterprises.

"The gestation period can be long," Goela said. He recalled how their commitment to a battered blue-chip stock required patience in its eventual turnaround. However, the journey was far from smooth. Episodes of frustration were common as prices can do nothing for a long time, he said.

Also Read: Rakesh Jhunjhunwala's big bets on Raamdeo Agrawal's 'bruised blue chips'

Goela highlighted the emotional toll of investing in ‘turnaround’ stories. They owned 3-4 ‘turnaround’ stories, and at times, it felt like they were in a bear market, he said. Even Rakesh Jhunjhunwala experienced serious pain and drawdowns from his buying prices.

One of the examples Goela shared was their investment in Escorts, an engineering company. “Escorts did nothing for three years after we bought it in 2013,” he said. The situation became even more frustrating when, in 2014, mid-cap stocks soared following Narendra Modi’s election as Prime Minister.

Despite the market rally, Escorts remained stagnant. “It was a very large position for us,” Goela said.