Gaurav Sharma – Fail Fast, Fail Early, Move On

https://www.linkedin.com/in/gstheproud/ (Gaurav Sharma) holds a post-graduate degree in management from Birla Institute of Management Technology (https://www.bimtech.ac.in/ (Bimtech)), in Uttar Pradesh, India, and a bachelor of science degree from the https://www.uniraj.ac.in/ (University of Rajasthan). He has had a rewarding five years of experience at various multinational companies in the domains of wealth management, investment analysis and portfolio reporting. He is presently working towards democratization and simplification of the wealth management services by leveraging machine learning, AI and data science. Gaurav aims to solve problems across customer segments comprising the masses, the affluent middle class and high-net-worth individuals (HNIs). During his tenure at https://www.maknowledgeservices.com/ (Moody’s Analytics), he gained practical exposure to global standards of investment research and reporting through various tool such as Bloomberg, Morningstar, https://www.factset.com/ (FactSet) and other proprietary tools. At https://www.mercer.com/ (Mercer,) he gained exposure to asset allocation, financial and retirement planning, and investment consulting. Prior to these, Gaurav worked in the global wealth and investment management business-line of Bank of America-Merrill Lynch and supported ultra-HNIs in managing their wealth.    “If the company’s growth plans are there, it will work.But if the management is not able to understand and … make investors’lives easy by telling them everything, if they try to hide and try to play with the accounting standards, and of course, if they try to siphon off money,at the end of the day, investors will get to know.” Gaurav Sharma   Worst investment ever  Young blood catches bug for stock investing  Gaurav was very young when he became interested in the stock market and was one of those guys who “jumped right into it”. He borrowed some money from a friend’s father, who was kind enough to believe in his investment philosophy. Due to his youthful enthusiasm, he was trying to make it big very soon in the market.   First foray rides educational technology wave in India  So, he decided to invest in education technology company, Educomp Solutions (Educomp, EDSO.NS). He did some balance sheet analysis and most of the basic research, and invested in the stock around its peak in 2008-2009. The company appeared to be at the forefront of the education-plus-technology mix, and for India, with hundreds of thousands of public, private, international and specialty schools all looking to drag their classrooms away from chalk boards, it seemed a no-lose situation. He bet really big on it, the numbers looked good, and every one or two years, there was very good news about Educomp winning contracts with 15 to 20 schools. Add to that the promotion of the K-12 education system, and government policy wanting to put a tablet into every student’s hands, everything was going great.  Hidden mismanagement leads to company’s downfall Gaurav says that if the company’s growth plans are there, it will work. But in Educomp’s case, the founder and CEO of the company had other plans with regards to managing. He was not doing the right thing with regards to the proper management of the company’s money, and was siphoning some off to other transactions, investing in other asset classes by taking money out of the company books, and was basically fudging of the books. The Gaurav had done extensive research on the company’s numbers, its balance sheets, growth plans, and growth in the sector; it all looked good. But as for the management quality, he was unable to assess that very well.   Investor loses 90% of borrowed funds as stock plunges   That’s what made his life difficult, because when the shares started falling, due to the management quality, he sought to assess the business, but he could not trust the management. The stock took a beating and it ended up a 90% loss of the whole...