19/06/10
Abe/SM/Minesh/
I am reproducing an article from net. Will you pl throw some light? Can we in group identify such a potential scrips?
Do you want to earn outsized returns in this overvalued market? Start looking for companies that have reserves and surplus far in excess of their share capital. Also, these companies should have promoter shareholding in excess of 75%. Strange parameters, isn't it? Especially the second one. However, there is a reason we chose these two parameters. You see, the Government recently came out with a proposal of making it mandatory for listed companies to have public shareholding of a minimum of 25%.
Now, this involves two routes. Either the company raises fresh equity or the promoters sell their stake. But both these routes would have created enormous pressure on liquidity. However there is a third route as per a leading daily. How about coming out with a bonus issue only for minority shareholders? This will do away with the need for currency transactions as the currency here would be the shares themselves. However, what the step will do is make minority shareholders rich at the expense of promoters. And the promoters may not be too willing to do an exchange of something for nothing. But you never know. Such instances have happened before. Think Reliance Power in 2008 and Kwality Dairy in the not so recent past. Thus, we don't rule out such a possibility entirely. The investor will really have to work hard to unearth such gems though.
Ravindra Deshpande
Happy Trading,
United we grow!!!
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