Ramanujan Thesis in Investing
- Sep 14
- 4 min read
Updated: Sep 15
Srinivasa Ramanujan Aiyangar was an Indian mathematician and is widely regarded as one of the greatest mathematicians ever.
One of the most important aspects of Mr. Ramanujan’s life was how he had many formulae and theories around numbers which no one initially believed to be true as he did not had the standard mathematical proofs on how he derived these formulae and theories.
So a big part of Mr. Ramanujan’s short life was spent working with English mathematician G.H Hardy at the University of Cambridge to arrive at proofs that most of his formulae & theories were indeed correct.
This part of his life has been very well portrayed in the movie- The Man Who Knew Infinity; it is a great movie to watch.
The following clip from the movie highlights the later years of Mr. Ramanujan’s life when he was suffering from health issues and him explaining to G.H Hardy on how he comes across all these formulae and theories-
As seen in clip, G.H Hardy is baffled at what Ramanujan is telling him as would anyone else would be. Think about it, how hard it would be to digest that one of the greatest mathematicians telling you that his formulae & theories are not an outcome of some structured process or logical reasoning but some imagination; crazy right.
But what Ramanujan thought of as his god speaking to him was actually a higher form of art wherein things just came to him naturally because of how good he was with numbers.
This another short clip from the movie highlights G.H Hardy explaining Ramanujan how as Mozart could work an entire symphony in his mind, Ramanujan can also work with numbers in his head in a way which is a very superior form of art. And that the world does not appreciates such an art form in fields which are inherently considered scientific in nature.
The reason for highlighting this story of Mr. Ramanujan is that in investing we have something similar wherein even though people keep saying that investing in more of an art than science, they do not appreciate the art part of it.
A famous saying in investing is that your thesis should be so simple that you can explain it to a kid with a crayon.
But in practical investing it is not that straight forward, a lot of things (the art part of investing) is very difficult to communicate so easily; but that does not take away the fact that an investor would have some deeper insights & understanding; which he is not able to communicate.
A year or so back I had written a post- Implicit Conviction for our members which talked about something similar. Would highly recommend readers to read that; have made the post public for everyone to read.
The reason for revisiting this thought and writing this post is because I came across a very insightful post recently which further substantiates these thoughts; the author in that post talks about how Stanley Druckenmiller might show that he does not has a process but what he actually has is something so ingrained in him that he cannot communicate it.
And I have been on both ends of this;
There have been many instances wherein some investor would have told me about an investment wherein either they could not explain the thesis behind them investing in it or whatever rational they put out felt like crap or bullshit. And while I kept thinking what weird logic is this guy investing with, they have done very well with these investments. It was a combination of their internalized process, intuition and/or implicit conviction which gave them the conviction to act, which I could not grasp from the outside.
On the other hand, there have been instances wherein I have had a good conviction on certain investments playing out in a certain way, but many in my investor circle could not get why I was investing in these companies as there was no elaborate thesis backed by data to support my conviction.
Two recent examples of this are our investment in Kernex and Apollo Microsystems over last year or so. In both these cases, my sole reasoning was that we have seen in last few years how many companies in the defence & railways have gone on to become 5-10x or more solely because many of these companies have been working on developing certain products for decades with no revenues and are now seeing government releasing large orders for them resulting in large pay-offs for these companies.
It was more of recognizing a certain pattern playing out in defense and railways stocks that I could see over last 3-4 years which I then applied to look for companies which are yet to see those large orders.
The whole takeaway from this post is that many times is it very hard to describe one’s conviction & thesis on a certain investment, but that does not mean that the investor is working with a fluke or is taking a hope bet; it is that art part of investing which cannot be easily explained.
Disclosures:
Surge Capital is a trade/brand name used by Ankush Agrawal (Individual SEBI Registered Research Analyst INH000008941) to provide equity research services in the Indian Equity Markets.
“Registration granted by SEBI, Enlistment with RAASB and certification from NISM in no way guarantee performance of the Research Analyst or provide any assurance of returns to investors”
“Investments in securities market are subject to market risks. Read all the related documents carefully before investing.”
“The securities quoted are for illustration only and are not recommendatory”
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