Stock Story II: Follow-up; Rights and the wrongs.



Stock Story II: Follow-up; Rights and the wrongs.
On Tuesday, 20 September 2011 I wrote the blog, Stock story II: Fly along with.
“An Indian software company, specific vertical to aviation industry.
Now an MNC after take over by an industry giant.
Best under a Billion according to Forbes Asia.
Acquired more than 34% shares by open offer, when SEBI rules required 20% offer.
Open offer price was more than double the present share price.
Aviation sector is the fastest growing sector of the Indian economy.
Whether Airlines make profit or not, Service providers to these sector will have boom time.
Identify this future Multi-Bagger.”

Ans: The Stock was Accelya Kale
price then was : 86 to 94, available in plenty

No active response to the blog / story from the community.

After company paid Interim dividend and declared final dividend

18/01/2012
Interim Dividend 13.50
29/10/2012
Final Dividend 10.00

and with Stock price of 130/140

Contacted Company in August 2012 and fixed a meeting with CFO Mr. Gurudas Shenoy at there Thane office,

Master Mind Group I refused to attend meeting, Not interested in Software /Services.

Master Mind Group II reluctantly attended the Meeting,

Most of my thoughts and ideas about the company were reaffirmed by the meeting.
Other learning’s:
1.       Parent has strong pipeline of customers
2.        Kale strong in the Accounting aspect of the business
3.       Tremendous synergy / symbiosis between Accelya and Kale with potential to get business from each other’s customers.
4.       While Investor community & likes of CARE’s and Piramal’s keen to invest in Analytics business, here was a listed Indian company doing Analytics of Aviation Industry.
5.       Concern that Aviation industry was in doldrums, but Kales revenue and Payments were assured,  Airline customers were dependent on Kales services and hence were prompt in payments.

Mastermind Group felt that company was good, Business was right, management was honest with no forward looking, hyper statements or projections,
But
Stock was fully priced / over priced

I Was fully committed to the Stock idea, with full conviction despite no external support / feed back.
Subsequently,
Announcement of New orders / Airline customers almost every week.
Stock going on Circuit breaker every day

Exchange put stock in Trade for Trade ???


 Stock hits 400 In late Nov 2012 ,
23rd Nov 2012 HDFC securities comes out with a  Buy report: Price: 336 Target : 399 to 499 ????
After the big broker report,
Stock steady with a lower bias.

My personal target
EPS or atleast 48/50, 12 /13 per quarter
PE 9of 10/ Price of atleast 480


Yet in Feb between price of 350 to 320 sold off the entire lot. !!!!!!

Reasons:
1.       Mid cap collapse: Arshiya Intl, Opto circuit, Orbit, Core etc. Market did not want to touch mid caps and this stock was in Trade for Trade, may be the exchange had justifiable reasons  !!!
2.       After HDFC report stock steady with a lower bias
3.       Broke the trailing stop loss of 350 ( charts /Technical’s/ Trading)
4.        Volume of 2 to 3000 per day, if came to a situation that had to off load it would take more than
 3 weeks to empty the folio


Today 10/05 2013
Stock Price Rs 510/- with dividend of Rs 30/-



Lessons learnt:
Rights:
1.       Identification of a dark horse
2.        Conviction
3.       Follow up , research, news update, MEETING Management

Wrongs:
1.       Lost  patience
2.       Confusing investment strategies with trading strategies.
3.       Putting  / considering all Mid caps in the same basket and extrapolating
4.       Under confidence in self compared to full time “ Stock Pundits”
What could have been done:
1.       Could have meet the Management again in Jan / Feb 2013
2.       Could have contacted the author of report of HDFC securities.
3.       Part sold the folio give room to buy if there is a decline
4.       ?/
5.       /?
       What are your suggestions / thoughts…..!

Comments

  1. Unknown12 May 2013 at 21:42

    Dear Dr PARAG SHAH,

    Congratulation to your effort and vision

    (1)New Owner did see value in KALE and was knowing that Co is not going to get delisted as second promoter was not exiting fully.
    (2)Again KALE was necessity for all poor airlines Co as KALE was adding value to Airlines by giving extra collection of money by efficiency by various way.
    (3)New owner of KALE was PE fund Who wanted to decrease debt in PARENT Co A/c and hence good dividend.
    (4)Again KALE incident shows that any business fortune can change or for that KALE's changed fortune after relative similarity in all business of parent Co Which KALE could not do for last 10 year before new owner came in picture.
    (5)Sustanibility of good dividend was in doubts and hence I suppose you exited.

    ANY EQUITY INVESTMENT in LARGE QUANTITY SHOULD BE MANAGED AT LEAST Via QUARTERLY MEET WITH PROMOTER / NEW LARGE INVESTOR ON REGULAR BASIS LIKE ANY JOB / BUSINESS.

    ARE YOU TRACKING ANY NEW STOCKS ???

    ReplyDelete
  2. Dr Parag Shah13 May 2013 at 06:35

    Thanks for your valuable input.

    ReplyDelete
  3. Rishabh P Shah13 May 2013 at 06:36

    very interesting analysis

    since it broke the stop loss of 350 you had little option but to sell in February

    i think you could have bought the stock again after the mid-cap collapse

    if you felt the fundamentals were strong
    however i believe that the sale in February seemed rather unavoidable (do correct me if i am wrong)

    even if you had bought it again at 320 (or probably lesser) you could have made a profit

    ReplyDelete
    Replies
    1. Dr Parag Shah13 May 2013 at 06:37

      Thanks for reading the post.

      Your analysis is appreciated and is appropriate.


      The stock had gone till 307 after selling.

      But at that time I thought it was better to wait and see,

      The favorable time never came.

      What had bugged me was:

      1. Action of stock exchanges to put the stock from Normal to Trade to Trade, which is usually done for volatile / operator driven/ manipulated stocks.



      2. HDFC report: they did not identify at 80/90/100/140 and were recommending at 350 for going to 440; being a suspicious minded person, I thought they were trying to distribute the illiquid stock to gullible investors after front running it, (It still might be the case: the operator / holder of major market chunk could not get out by distributing and hence is raising the price)


      U have a good knack for stocks,

      Supplement it with knowledge (few eBooks that I had mailed)

      It will take your Bank balance to great heights.

      Delete
  4. Rahul Dedhia13 May 2013 at 06:41

    BUY GOOD STOCK AT FARE PRICE AND NOT FAIR STOCK AT GOOD PRICE

    INVESTMENT OF RS.90000/- HAVE MADE 5,63,500/- IN 650 DAYS WHICH IS 175% COMPOUNDED RETURN

    BUT ........ ANY HOW !

    U HAVE MADE 120% RETURNS ...... WHICH IS NOT BAD .....
    VERY FEW & FEW'S HAVE MADE MONEY'S .........

    MORAL : ENJOY..... ENJOY............. ENJOY

    HUMAN PHSYCOLOGY :
    FEAR & GRID
    WHEN WE BUY STOCK PRICE COMES DOWN & WHEN WE SELL PRICE GOES UP

    ReplyDelete

Post a Comment

Popular posts from this blog

Aab Tak Chhapan, Aab Nahi to Kab?

Image
I am 56, if not now then when? "If I can, anybody can". India has become the capital of Obesity, Diabetes and Osteoporosis  due to lack of motivation for Outdoor activity. "If you Desire change, change yourself first". I used to advise patients to opt for a active outdoor life. But nobody listened. As a Surgeon at 56, aspiring to be a role model for wellness and fitness I participated in the Polar Fjallraven 2018 contest. Few years back on reaching 50s, I had lot of problems. Syndrome X, Midlife crisis, Mid WAIST crisis, Mid leg crisis and what not. I had the option of taking the Stick – wooden, aluminium, medicine !! I opted for two sticks instead of one. The stick of Running and Hiking. Over the past five years I have played Squash, Lifted weights done a few Half Marathons,Skied and Trekked. Local treks ( Ghatkopar Tekddi, Mulund Tekddi, Sahayadri Ghats and Forts and then high altitude mountain treks in India and Nepa...
Read more

#celebrating60s. Atmanirbhar 41 kms run. 5 th Dec 2021

#celebrating60s Atmanirbhar 41 kms run. Self supported Run. Nutrition, hydration, illumination and music all carried on back. Thanks K Sanjay Singh for giving company in the last 5 kms, pacing and helping me climb the "wall". I dedicate the Run to Dr Pranesh Patil Gaikwad, senior Anesthetist Ghatkopar, fellow runner, co trekker, and travel buddy, with a prayer.. recover soon dear friend. I continuously prayed for him during the run and could finish the run smoothly. The collective prayer of all will smoothen his recovery. We have travelled to many places together, but many are still on the bucket list. Recover soon Patil so I can begin planning.
Read more

Cipla Embraces Gilead and a New Era as Priorities Change

Cipla Embraces Gilead and a New Era as Priorities Change Divya Rajagopal Mumbai:   Once a steadfast backer of generics, co now enters into a deal to make Hepatitis drug for MNC ruary last year Hamied had said  In an interview to ET in 2013, YK Hamied, the founder chairm an of Cipla, and some say the scourge of multinational drug companies, prophesied that the Indian drug industry will witness a sea change around the year 2020.“The momentum of 1972 to 1995 (pre-patent era) can't stop . It will last till 2015, but not after that. So to protect myself for 2020 I have to make radical changes.“ On Monday , the world got a glimpse of the kind of change that Hamied had in mind when Cipla teamed up with California-based Gilead Lifesciences to make and sell its path-breaking Hepatitis C drug Sofosbuvir under voluntary licence. On the face of it, there is nothing wrong with this kind of a deal.Pharma companies ink many such pacts on a regular basis. But what...
Read more