BSEIndia: All Stock Market News: RE: [sharetrading] Potetial Scrips

Saturday, June 19, 2010

RE: [sharetrading] Potetial Scrips

Every one talks of liquidity. But so many IPO’s have hit the market and cos garner so much money for various issues, and still there is no liquidity crunch. Wonder where is the money coming out of? I am sure the promoters will come out with some new system to fool the public as usual. Or they will tie up with some operator and hike the prices and then sell equity. After all that is not going to hurt the index, except for Wipro.

How many IPO’s of private companies in the past 20 years was value for money in first 5 years of issue? Except when it was operated. The vast majority took the retailer for a ride and what a boom ride that was, except for few which returned some money to the investor. Most of these were not available for retailer as they were heavily subscribed. Reflecting back, I was thinking, if I had placed all the IPO money in a MF in 2004 or before, it would have grown by a minimum 5-6 times………..

So let us stick to our routine than chase this wisp of fortune….

And try bottom picking like ABAN, RELMEDIA for now… Who knows what these will return…. In coming days

From: sharetrading@yahoogroups.com [mailto:sharetrading@yahoogroups.com] On Behalf Of Ravi Deshpande
Sent: Saturday, June 19, 2010 9:32 AM
To: Yahoo Group
Subject: [sharetrading] Potetial Scrips

19/06/10

Abe/SM/Minesh/HSR etc. etc.

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