MUMBAI: A popular theme in Malayalam cinema in the 80s was one where the protagonist aimlessly boarded a train from Kerala to Mumbai for a living and made it big in the country’s financial capital. Kochi-based investor Porinju Veliyath ’s rags to riches journey probably has all the makings of such a blockbuster of that decade.From being a phone operator in erstwhile Cochin to one of the most influential small-cap stock pickers in the country today, Veliyath, 53, has indeed come a long way though his recent ascent has been pockmarked with criticism about the quality of his stock pickings. Some of his more recent top picks are Shreyas Shipping, Jubilant Industries, TCI, NIIT, Force Motors and Alpa Labs. The total value of his share holdings is not known as he holds more than 1% in very few companies.In addition to managing his own money, Veliyath handles client funds of close to Rs 400 crore through his firm Equity Intelligence. Among his other small-cap holdings are FCEL, Unitech, KRBL, Selan Exploration, Samtex Fashion, Simran Farms, Accel Transmatic, Stylam Industries, IZMO, Eastern Treads and BDH Industries. Most of these companies would not pass muster with large institutional investors. Nevertheless, these stocks have jumped multi-fold amid the mid- and small-cap frenzy in the last couple of years.In the most recent case of Alpa Labs, shares more than quadrupled in less than three months since early September after news of Veliyath’s interest in the stock got out. Another of his picks, NIIT, has more than doubled in six months since early June. These winners have helped him gain a fan following on Dalal Street. ET caught up with Veliyath in a five-star hotel in Mumbai’s financial hub Bandra Kurla complex in November. After hesitating to talk about his personal life initially, Veliyath opened up about his college days, early years in the profession and his investment philosophy. His hunger to make it big was partly because of an underprivileged childhood.At the age of 16, it dawned on Veliyath that his family did not have enough money to fund his higher education. The home they were staying in till then had to be sold to repay the debts. Soon, Veliyath shifted to Ernakulam, Kerala’s biggest city, to hunt for a job to support his family and also fund his education.He started as an accountant in a private firm at Rs 1,000 per month and then at Ernakulam Telephone Exchange as a phone operator drawing Rs 2,500. “I had to start working right from my teens…It was not easy. We were homeless when I started working,” he said.“Those were tough days.” To save on rentals, Veliyath enrolled for the law programme at Ernakulam Law College, which offered cheap accommodation and canteen to its students. The next five years were spent studying law and routing trunk calls for the Kochi elite. After graduating in 1990, and not immediately finding any gainful employment back home, he boarded the steam engine-drawn Jayanthi Janata, a popular train for Keralites till mid-90s, for Mumbai with dreams of getting rich. Upon reaching the city, an acquaintance of Veliyath found him a job with Kotak Securities , initially as an office clerk and later as a floor trader.Before hitting the trading floors, Veliyath changed his name to Francis. “Porinju was difficult for marketpeople to remember; so I used the English equivalent of Porinju, which is Francis,” he guffaws. Veliyath stayed in Mumbai only for nine years. But, by then, he had learnt the ropes of the trade — mainly badla — from the best in market those days. The biggest lesson that Veliyath had learnt in his stint in Mumbai was that one only needs “common sense” to make money in stocks.In 1999, Veliyath moved back to Kerala because he was unhappy with the quality of life in Mumbai. Soon after shifting base to Kochi, he made his first investment, mopping up as much as 8% stake in Geojit Financial Services. Geojit was trading in single-digits those days and the whole firm was valued at around Rs 2.5 crore then. “I told (CJ) George (founder of Geojit) then, his company would trade at Rs 1,000 in a few years but he simply laughed it off,” Veliyath said. “The decision to buy Geojit was fairly a simple one; here you have a dividend paying company having capital market exposure, clean management and no debt — all for grabs at just about Rs 3 crore. It was an easy decision,” he said.The stock may not have touched Rs 1,000 but Geojit touched a high of Rs 280.65 in September 2006, helping him make big money in the investment. BNP Paribas acquired 34.5% stake in Geojit in 2007. This was the beginning of some larger fortunes to be made from the stock market. Armed with the newlyacquired wealth, Veliyath bought back the land his family sold decades ago to repay debt and built a luxurious farmhouse on it. Veliyath claims his investment portfolio has generated 33% compounded gains every year since 2003.This could not be verified independently as portfolio advisors are not required to officially declare comparative returns. Veliyath’s investment philosophy is far from conventional. He does not base his strategy on financial ratios or business cycles; on the contrary, it defies various established investment parameters. Many stocks in his portfolio are illiquid, while some of them do not make sense to orthodox stock pickers. His recent interest in some small-cap real estate companies have raised eyebrows.“I feel there’s price for everything. If a company is doing well and has good future prospects, ethics and corporate governance should not come in the way of your investments ,” said Veliyath, defending his investment strategy. “I don’t keep any market cap limits nor do I believe there’s value in buying big companies at obscene valuations,” he said. “Illiquidity in a stock is fine by me. In fact, only because it’s illiquid, these stocks have not grown in value,” he added. Detractors dismiss Veliyath as a rash stock-picker with ‘little regard for quality’.The more acrimonious ones simply feel he is in cahoots with friendly promoters. “I don’t befriend management for insider information,” Veliyath said. “I buy lesser-known, high quality businesses to derive maximum portfolio value. I don’t shy away from smaller companies like other ‘knowledgeable people’ do.” Veliyath quips as an afterthought: “I don’t buy a lot of great companies with clean balance sheet, honest management and clear business visibility. If you invest in such companies, even bank FDs would beat your portfolio returns.”