Veteran investor and broker Parag Parikh, known for his investment approach based on behavioral finance, died May 3 in a car crash in Omaha, Nebraska. He was 60.
The Mumbai-based Parikh was the Omaha to attend Warren Buffett’s talk as part of Berkshire Hathaway shareholders meeting. Parikh, chief executive officer of PPFAS (Parag Parikh Financial Advisory Services Asset Management Company), was pronounced dead at the Nebraska Medical Center. He is survived by his wife Geeta Parikh, who was also in the same car, and two sons, Neil and Sahil. Geeta Parikh, 59, who was hospitalized in critical condition with head and chest injuries, is improving, the Omaha World-Herald reported.
Two members of Parag’s firm, Rajeev Thakkar, 42, of Mumbai and Raunak Onkar, 29, of Maharashtra, were traveling with the couple. Thakkar and Onkar were treated at the Nebraska Medical Center for minor injuries and were released. The four Indian visitors were riding in a 2014 Volkswagen Jetta driven by Thakkar. The car collided with a 2011 Chevrolet Silverado pickup driven by Daniel R. Vacek, 63, of Omaha. Vacek was reportedly treated for a shoulder injury at Methodist Hospital and released. A charge of misdemeanor motor vehicle homicide is pending against Thakkar.
Parikh launched PPFAS AMC, India’s youngest fund house, in 2013. The fund house launched only one scheme, PPFAS Long Term Value Fund (PLTV), and two years down the line, it still remains its only scheme in, even though the rest of the mutual fund industry has had new launches in the past year. As of March this year, PPFAS’s average asset under management (AUM) was Rs.575 crore. The AMC is a mid-sized mutual fund house which was having total assets under management of Rs. 572 crore as on March 31. As of now, the company is having 4,000 folios and it employs 35 staff at present,
Parikh’s succession plan is yet unknown but some say that his elder son Neil would take charge of the sponsor company, and Rajeev Thakkar, the chief investment officer, would take charge of the fund house.
Parikh had an existing portfolio management service (PMS) scheme till about 2012 when he decided to start a fund house and transferred approximately 600 of his clients with a combined corpus of about Rs.350 crore to the new MF scheme, At that time, the Securities and Exchange Board of India (Sebi) had raised the minimum investment in a PMS from Rs.5 lakh to Rs.25 lakh. He was always critical of fund houses paying to distributors through the nose and then bleeding. “He ran a very frugal outfit and didn’t have a huge distribution cost. He refused to pay big commissions. Though he had a small AUM, he was a happy man and didn’t do anything unethical,” Sanjay Bakshi, professor of behavioral finance and business valuation at Management Development Institute, Gurgaon, and a close friend of Parikh, told Mint.
Apart from heading PPFAS, he also made sure he invested his own money in the scheme. Though Sebi made it a rule later that sponsors must invest a certain sum of their own money in a scheme, Parikh started this practice at the time of the launch of his fund house itself. “It is not only the employees who invest, but also me, the directors, the fund managers and the trustees. There is no rule or compulsion to invest. But how can we ask others to invest when we ourselves have not invested?” he told Mint in an interview in January 2014.
Over the years, Parikh appeared to have followed his heart and started and closed down many businesses before he found his calling in the MF industry. When he first wanted to get into some sort of manufacturing, Chandrakant Sampat, a pioneer of value investing in India and known to be Parikh’s guide, persuaded him to get into stock markets. From being a broker, to being one of the first such to start research, to dabbling in merchant banking, to starting a portfolio management services business and then finally a mutual fund, Parikh was ruthless in decision making and didn’t hesitate to close down businesses that he felt had outlived its time and move on.
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