Warren Buffett Quotes

Saturday, July 26, 2014

What is the difference between investing and trading ?

As I mentioned last week , new stock suggestions will be posted only on First and Third Saturday's of every month .Meanwhile , in recent times receiving lot of mails from new entrants in stock market who are still confused about many basic terms and words using here.The below posting is only for such newbies and most of them even may cut and paste from various sources ,but I think it is helpful for them.
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Courtesy :Investopedia


Investing and trading are two very different methods of attempting to profit in the financial markets. The goal of investing is to gradually build wealth over an extended period of time through the buying and holding  of a portfolio of stocks, baskets of stocks, mutual funds, bonds and other investment instruments. Investors often enhance their profits through compounding , or reinvesting any profits and dividends into additional shares of stock. Investments are often held for a period of years, or even decades, taking advantage of perks like interest, dividends and stock splits along the way. While markets inevitably fluctuate, investors will "ride out" the downtrends with the expectation that prices will rebound and any losses will eventually be recovered. Investors are typically more concerned with market fundamentals, such as Price Earning Ratios( P/E) and management forecasts.

Trading, on the other hand, involves the more frequent buying and selling of stock, commodities, or other instruments, with the goal of generating returns that outperform buy-and-hold investing. While investors may be content with a 10 to 15% annual return, traders might seek a 10% return each month. Trading profits are generated through buying at a lower price and selling at a higher price within a relatively short period of time. The reverse is also true: trading profits are made by selling at a higher price and buying to cover at a lower price (known as "Selling Short") to profit in falling markets. Where buy-and-hold investors wait out less profitable positions, traders must make profits (or take losses) within a specified period of time, and often use a protective stop loss order to automatically close out losing positions at a predetermined price level. Traders often employ technical analysis tools, such as moving averages and stochastic oscillators, to find high-probability trading setups.

 A trader's "style" refers to the time frame or holding period in which stocks, commodities or other trading instruments are bought and sold. Traders generally fall into one of four categories:

  • Position Trader – positions are held from months to years
  • Swing Trader – positions are held from days to weeks
  • Day Trader – positions are held throughout the day only with no overnight positions
  • Scalp Trader – positions are held for seconds to minutes with no overnight positions

Traders often choose their trading style based on factors including: account size, amount of time that can be dedicated to trading, level of trading experience, personality and risk tolerance. Both investors and traders seek profits through market participation. In general, investors seek larger returns over an extended period through buying and holding. Traders, by contrast, take advantage of both rising and falling markets to enter and exit positions over a shorter time frame, taking smaller, more frequent profits.



Thursday, July 24, 2014

APAR INDUSTRIES / CENTUM ELECTRONICS - UPDATES

APAR INDUSTRIES  

This stock recommended @ Rs.145 which hits its 52 week high  today @  Rs.402 .Yesterday ,HDFC Mutual Fund bought 4 lakhs shares of this company at an average price of Rs.365.

Recommendation Link HERE

CENTUM ELECTRONICS  recommended @ Rs.88 currently trading around its life time high  of Rs.412 .On 22/07/2014 ,HDFC Mutual Fund bought 3.71 lakhs shares of this company at an average price of Rs.360.

Still recommending to HOLD it

Recommendation Link HERE

Tuesday, July 22, 2014

CAPLIN POINT LABORATORIES LTD - UPDATE

CAPLIN POINT LABORATORIES - This pharma stock recommended about 6 months back @ Rs.86 which hits its lifetime high today @  Rs.339 and closed in upper circuit.Stock already turned as a 4 bagger during this short period .Those with some risk appetite can still  HOLD it .

Recommendation Link HERE

Saturday, July 19, 2014

KOPRAN LTD- REPEAT


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My two Cents 

In the past 4 years ,through this blog I suggested more than 250 companies from small and midcap space.Since the number of IPO's are very small and due to  recessionary situation during this period ,number of quality companies eligible to suggest is limited now. Hence from now onwards , new stocks will be suggested only on first and third Saturday's ( only 2 stocks in a month). Updates  will be done on already recommended stocks as and when necessary. Received lot of mails in my new mail id  but replies may be delayed  to some per-occupation.

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In the past I  recommended many pharma stocks like Caplin Point Lab,SMS Pharma,Granules India,Biocon..etc. KOPRAN LTD itself is one one of my old recommendations @ Rs.27 (HERE) .Now this stock is trading around Rs.42 .Considering the bright prospects and increasing interest of management ,repeating this stock again.

Once this  Parijat Group company was among the largest manufacturer of Amoxycillin and share price was at par with today's biggies like Dr.Reddy's Lab ..etc . But due to some change in business environment including cheap Chinese import of Company's product , some mismanagement and their inability to cope  with changed business scenario ,this stock came down drastically from a price level of Rs.830 in 1994 to single digit in Rs.2008.After a long gap, now the management seems taking active steps to revive the company .From March 2013 to March 2014 ,promoters hiked their stake by 5 % ( The maximum permissible limit through creeping acquisition route in a Financial year). Company recently recruited lot of people to strengthen its marketing channels .One notable point is its receipt of approval from UKMHRA  for its Khapoli facility which produces Finished Dosages.This is one important trigger and company is expected to start gaining business from the next quarter of this Financial Year. Apart from Pharma , company planning to launch few FMCG products too ( Details available in Company Website HERE).

In financial side,Kopran reporting steady improvement in past few years .I hope this will accelerate going forward  once the export to UK and EU starts in near future.


                                            Click on the image for a better view

In addition to this ,Kopran is now taking efforts to concentrate in high margin segments like Oncology ..etc I hope ,company's new efforts will pay off and still there is room for substantial appreciation going forward.Suggesting this stocks for investors with enough patience which is currently trading around Rs.42 .Stock listed in both exchanges .



Disc: It is safe to assume that I have vested interest in all stocks I am suggesting .

Friday, July 18, 2014

IMPORTANT ANNOUNCEMENT ...

PLEASE NOTE THAT MY PREVIOUS EMAIL ID ( valuepick@rediffmail.com)  HAS  CHANGED to valuepick100@gmail.com .PLEASE DO NOT SEND ANY EMAILS TO MY OLD ID AND I AM IN NO WAY RESPONSIBLE TO ANY SUGGESTIONS/INSTRUCTIONS RECEIVED FROM MY OLD ID.

Thursday, July 17, 2014

PERSISTENT SYSTEMS LTD - UPDATE




PERSISTENT SYSTEMS recommended @ Rs.430 ,hits its life time high today @ Rs.1344 .Those with below average risk appetite may sell 35% of your holdings to make the remaining cost free . Others can still HOLD it for long term 

Link to Original recommendation HERE

Tuesday, July 15, 2014

UPDATES ON PREVIOUS RECOMMENDATIONS

1) AHLCON PARENTERALS LTD

Recommended Price Rs.64

Current Price Rs.501 

Current Recommendation : Book Profit

Recommendation Link HERE

2) ROTO PUMPS  LTD

Recommended Price Rs.80

Current Price Rs.395

Current Recommendation : Sell 25 % of original holdings and keep the rest as cost free

Recommendation Link HERE


3) LA-OPALA RG

Recommended Price Rs.66

Current Price Rs.1013

Current Recommendation : Sell 10 % of original holdings and keep the rest as cost free

Recommendation Link HERE


Saturday, July 12, 2014

CAPITAL FIRST LTD - MUST BUY














If we prepare an industry wise list of listed companies ,no doubt Financial Service Sector will be at the top by number .At the same time if the list is based on quality of promoters the same sector will be always at the bottom.Lot of bogus paper companies without any business operations are listed in our stock exchanges especially in BSE from this sector.So selecting a quality company from this sector warrant a close screening of its promoters integrity,executives quality  and the standard and professionalism  of its governing board etc ... 

So far I recommended very rarely from this sector and the only  recommended stock from money lending business ( excluding housing finance)  – Cholamandalam Finance – already turned as a five bagger ( Recommended @ Rs.82 , touched a high of Rs.445 and currently trading @ Rs.405 Rec. Link HERE) . After a long gap ,recommending one stock from this sector which I believe as a stock with immense potential and led by quality management by all means .

Capital First limited – ( formerly known as Future capital Holdings)  came out with an IPO in 2008 and allotted shares at a price of Rs.765 per share.This company was originally promoted by Future group of Biyani’s .Later future group had lot of debt related issues mainly in their flagship – Pantaloon retail business.Due to this ,future group decided to exit from this company and same acquired by US based private equity investment firm  Warburg Pincus.Since this  company’s business is simple and similar in line with  other NBFC’s , I don’t think much explanation is needed about its business side .Why this company is special to me and what distinguishing it from other companies from the  same sector is –the people behind it.Before looking into this  important factor ,just few lines about its business. Company is an NBFC offering personal loan,Loan for consumer durables,gold loan,two wheeler loan,loan against property and distributing various insurance products.CAPF is present in 40 cities through its 164 branches . As on 31 March 2014 , assets under management (AUM) of company increased to  Rs.97 billion from Rs. 75.10 billion compared with just previous year and capital adequacy ratio  is healthy at 24 %. Due to management’s prudent decision to concentrate in retail lending , its gross NPA is just 0.45 %  and net NPA is only 0.08 % .This is one of the best among any listed NBFC’s. CAPF recently received license to start housing finance business through its subsidiary Capital First Home Finance Private Limited and it is expected to contribute from this year itself .
 
The real Differentiators

As I mentioned at the beginning itself , while selecting a stock from NBFC sector for investment purpose there is lot of options in this space.But if we look in detail ,many of them are only for name sake and quality wise very few companies deserves a serious look .Quality of people behind any company will surely reflect in quality of business.So let us look behind the curtain to get an idea about the people behind it . 

First of all , For a business like NBFC , promoters ability to infuse funds is core point for business growth . CAPF is currently owned  by one of world’s largest and most reputed  US based private equity investment firm Warburg Pincus through its affiliate Cloverdell Investment Ltd. Warburg Pincus’ AUM is about $48 billion and invested in more than  700 companies in 35 countries.I think ,with such  a strong hand behind it , fund raising for expansion is not at all an issue for CAPF. Promoters currently holding about 72 % stake in CAPF . In addition to this ,recently HDFC Standard Life Insurance Company Ltd infused Rs.50 Cr by subscribing a 4% stake in this company.

 
 
In a business concentrating in financing retail clents , experience and expertise of leader is another important factor.MD of CAPF Mr V. Vaidyanathan is the best choice for this position.Mr .Vaidyanathan  need no introduction to banking and finance circles in India .He started his career with Citibank India Consumer Banking Division in 1990 and worked there till 2000 .Later he moved to ICICI Bank and appointed as Executive Director on the Board of ICICI Bank at the age of 38. He was also the Chairman of ICICI Home Finance Co. Ltd., and served on the Board of ICICI Lombard General Insurance Company and CIBIL.During his tenure with ICICI Bank he played  key role in Senior Management responsible for transition of ICICI from a Domestic Financial Institution to a Universal Bank. He launched the Retail Banking Business for ICICI , and transformed it into a large retail bank  in the country. He also built the SME business and Rural Banking Business for ICICI Bank.During his tenure ICICI received many awards including "Best Retail bank in Asia 2001", "Excellence in Retail Banking Award" 2002, "Best Retail Bank in India 2003, 2004, and 2005 from the Asian Banker", "Most Innovative Bank" 2007, and was nominated "Retail Banker of the Year" by EFMA Europe for 2008 and 2009. Whoever take the credit ,I believe ,Vaidyanathan is the master brain  who  make ICICI bank  as one of the top retail bank in the country . From May 2009 to August 2010 he served as the Chief Executive Officer and Managing Director of ICICI Prudential Life Insurance Company.The then promoter of CAPF Mr,Kishore Biyani brought Vaidyanathan into CAPF in 2010 .Leadership of such an experienced retail banker is one of the biggest asset of CAPF .







        LATEST INTERVIEW WITH V VAIDYANATHAN   Video - 6 Min . ( Courtesy : CNBC TV 18)




Let us look into the board of CAPF which consists only top class professionals. Their brief profile as follows
Mr. N. C. Singhal – Former VC & MD, SCICI Ltd. (Later  merged with ICICI Ltd.)
Mr . M S SUNDARA RAJAN - Former Chairman & MD, Indian Bank
Mr .ANIL SINGHVI - Former MD & CEO, Ambuja Cements Ltd
Mr. HEMANG RAJA - Former MD & CEO, IL&FS Investmart Ltd.
Mr VISHAL MAHADEVIA - MD & Co-Head, Warburg Pincus India Private Ltd
Conclusion
After some difficult period under the Future group ,CAPF is now moving to the high growth path .Company reported an income from operations of Rs.1067 Cr and a net profit of Rs.53 Cr in FY 2014.In a recent interview MD of the company mentioned that the company's  profit will expand substantially  in FY 2015 compared with what it achieved in FY 2014. . In nut shell – there is everything in this company to emerge as one of the most successful NBFC in future and Capital First  is my top pick and a must buy from NBFC sector for any small/mid cap portfolio.Stock is listed in both exchanges and trading around  Rs.204.


Suggested Readings 



3) Exit of Vaidyanathan - Video 

4) Latest Annual Report for FY 2013-14

Disc: It is safe to assume that I have vested interest in CAPF
# Part of above data re-produced from publicly available sources.


Thursday, July 10, 2014

DEWAN HOUSING FINANCE CORPORATION LTD - UPDATE

DEWAN HOUSING FINANCE recommended @ Rs.160 ,currently trading around Rs.375 .Stock appreciated more than 100 % in six months .Still recommending to HOLD this stock for long term


Recommendation Link HERE

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