AFTER all the millions Jayesh Maneck multiplied on the Fantasy stock exchange, the real thing had to be different. But there was enough that was for real in the The Sunday Times fantasy fund competition that Maneck won two years running. And the fantastic could happen yet again with the real money Maneck is investing now on the Bombay Stock Exchange (BSE).
A quiet man with bullish ways when it comes to making money, Maneck is a Uganda-born Gujarati who came to study in Britain when he was 15, a year before the Idi Amin expulsions drove the rest of his family out. With eight pharmacy stores around London, he is more than moderately successful. But his real success now has little to do with pharmacy.
"The fantasy fund has opened up my gateway to India," says Maneck, sitting in his office above one of his pharmacy stores (since his win he spends far more time upstairs than in the pharmacy below). "I have always been interested in India, and I have been investing my own money there," he says, talking between data calls from Bombay. An Indian bond, yes. But Bombay makes sense, and he believes it'll make money for him.
The fantasy began on a Sunday morning in May two years ago. Maneck invested all of £20 to enter a Fantasy Fund Manager contest floated by The Sunday Times, London. The prize money offered was £100,000 for making the most imaginary investment over six months on the London Stock Exchange (LSE). Maneck won the contest that year, and the year after that, beating 40,000 others to get the prize. The contestants included a financial analyst from J.P. Morgan, who he beat to second place, and a battery of London's financial pundits.
Nobody expects the fantasy topper to pull it off yet again and for real this time with the BSE, Maneck himself least of all. The contest itself was a good deal more than just dreaming up big money. It was tough and long, involving hours of research every day coupled with a sense of decision-making Maneck seems to be blessed with.
The money was fictitious but the stocksreal, says Maneck. The investors in fantasy were given 250 of about 2,000 listed companies on the LSE to play with. The game allowed you to buy more in a company than it was worth, making possible gains at 5,000 per cent. In the first year Maneck converted a mock £10 million fund to £502 million. Then last year he made a make-believe £57.5 million from £10 million under stricter rules, still way ahead of the winner.
His two wins earned him £200,000 and Maneck picked up about £30,000 in tidbits along the way. That was an earning of more than a quarter million pounds from £40—the real crumbs from dream earnings.
Luck could have influenced Maneck's first win. But when he won a second time, the market in London began to sit up and take serious notice. And Maneck was suddenly flooded with fantastic offers, including being adviser to Funds, the consultant to consultants.
But Maneck decided to go for the real stuff with a £4.6-million real money fund to invest in Bombay. Small by investment fund standards. But the way Maneck playsit, small promises to be bountiful.
Maneck aimed to collect £5 million in total. To beat capital gains tax in india, 60 per cent of that had to come from NRIs, so he could collect at most £1.85 million from others in order to keep the NRI shareat 60 per cent. He actually collected £2 million more from the others. "We had to return about £2 million. No more was expected of NRIs," he says. With £100,000 of his own invested in the Fund, his investors are assured that Maneck's intentions are for real.
Maneck has since invested that money in Bombay in May through the fixed term closed-ended fund he calls Invil (India Value Investments Ltd). Initially, Maneck found moving on to the BSE turf tricky. But he countered it by recalling the philosophy of his favourite investor Sir John Templeton—buy at the point of maximum pessimism. Elections and the early days of a coalition government could have been the point of maximum pessimism, the point at which Maneck's fund was expected to start buying. But with the Sensex well above 3,500 through the elections, the anticipated pessimism has failed Maneck.
But a booming market cannot all be bad news. If the market can work well under a coalition government, then a better one can only be good, he says. Within the boom, it all depends on the company you pick. With Maneck blue chips are likely to be few. Through his fantasy funds, he picked shares in a blue chip company only once.
From the first floor of his deceptively suburban office, Bombay is home ground. The Bombay market can be a lot more volatile than the LSE, and as an investor in Bombay since 1992 he knows that as well as anyone. But eventually it is all driven by crowd psychology—whether it's India or Japan or New York or London.
Bombay may just be the beginning, but Maneck is already planning a second global fund with about £20 million of investors' money. That will take in Indian stocks as well, but won't be another India fund, he says.
The India fund will remain closed till the end of December 1999, unless the majority of shareholders decide to extend it. For by that time, they will see what wonders Maneck can work with real money in a real world.