Disc: Holding shares of SKM and no other vested interest
Wednesday, July 29, 2015
Sunday, July 26, 2015
MIC ELECTRONICS - is one stock suggested earlier around @ Rs.5 which is currently trading around Rs.23. Now , in a very important development ,company informed that Leyard Optoelectronics, the word leader in high end LED display products expressed their intention to subscribe 20 Million shares and 30 Million warrants @ Rs.25 .In addition to this, 3 million warrants will be allotted to another individual at the same price . This fund infusion ( Approx: Rs.135 Cr) will help the company to address much needed working capital and other funding requirements. Technical ,Manufacturing and Marketing support of a world leader is expected to give a new lease of life to MIC .Leyard is the company which supplied display products used for the opening ceremony of 2008 Olympic Games held in China and its stock listed in Chinese stock Exchange. I expect better days for MIC's share holders who kept faith in the company and resist the temptation to trade with it for some quick penny.
Link to the website of Leyard HERE
Saturday, July 25, 2015
Courtesy : ET
The lure of big money has always thrown investors into the lap of stock markets.However, making money in equities is not easy. It not only requires oodles of patience and discipline, but also a great deal of research and a sound understanding of the market, among others. Added to this is the fact that stock market volatility in the last few years has left investors in a state of confusion. They are in a dilemma whether to invest, hold or sell in such a scenario. Although no sure-shot formula has yet been discovered for success in stock markets, here are some golden rules which,if followed prudently, may increase your chances of getting a good return
1. Avoid the herd mentality:
The typical buyer's decision is usually heavily influenced by the actions of his acquaintances, neighbors or relatives. Thus, if everybody around is investing in a particular stock, the tendency for potential investors is to do the same.But this strategy is bound to backfire in the long run. No need to say that you Should always avoid having the herd mentality if you don't want to lose your hard-earned money in stock markets. The world's greatest investor Warren Buffett was surely not wrong when he said, 'Be fearful when others are greedy,and be greedy when others are fearful!'
2 Take informed decision :
Proper research should always be undertaken before investing in stocks. But that is rarely done. Investors generally go by the name of a company or the industry they belong to. This is, however, not the right way of putting one’s money into the stock market.
3 Invest in business you understand :
Never invest in a stock. Invest in a business instead. And invest in a business you understand. In other words, before investing in a company, you should know what business the company is in.
4. Don't try to time the market:
One thing that even Warren Buffett doesn't do is to try to time the stock market,although he does have a very strong view on the price levels appropriate to individual shares. A majority of investors, however, do just the opposite, something that financial planners have always been warning them to avoid, and thus lose their hard-earned money in the process. 'So, you should never try to time the market. In fact, nobody has ever done this successfully and consistently over multiple business or stock market cycles.Catching the tops and bottoms is a myth. It is so till today and will remain so in the future. In fact, in doing so, more people have lost far more money than people who have made money
5. Follow a disciplined investment approach:
Historically it has been witnessed that even great bull runs have shown bouts of
panic moments. The volatility witnessed in the markets has inevitably made investors lose money despite the great bull runs.However, the investors who put in money systematically, in the right shares and held on to their investments patiently have been seen generating outstanding returns. Hence, it is prudent to have patience and follow a disciplined investment approach besides keeping a long-term broad picture in mind.
6. Do not let emotions cloud your judgement:
Many investors have been losing money in stock markets due to their inability to control emotions, particularly fear and greed. In a bull market, the lure of quick wealth is difficult to resist. Greed augments when investors hear stories of fabulous returns being made in the stock market in a short period of time. 'This leads them to speculate, buy shares of unknown companies or create heavy positions in the futures segment without really understanding the risks involved,' says Kapur.Instead of creating wealth, these investors thus burn their fingers very badly the moment the sentiment in the market reverses.In a bear market, on the other hand, investors panic and sell their shares at rock-bottom prices. Thus, fear and greed are the worst emotions to feel when investing, and it is better not to be guided by them.
7 Create a broad portfolio :
Diversification of portfolio across asset classes and instruments is the key factor to earn optimum returns on investments with minimum risk.Level of diversification depends on each investor's risk taking capacity
8. Have realistic expectations.
There's nothing wrong with hoping for the 'best' from your investments, but you could be heading for trouble if your financial goals are based on unrealistic assumptions.For instance, lots of stocks have generated more than 50 per cent returns during the great bull run of recent years. However, it doesn't mean that you should always expect the same kind of return from the stock markets. Therefore, when Warren Buffett says that earning more than 12 per cent in stock is pure dumb luck and you laugh at it, you're surely
inviting trouble for yourself.
9. Invest only your surplus fund:
If you want to take risk in a volatile market like this, then see whether you have surplus funds which you can afford to lose. It is not necessary that you will lose money in the present scenario. You investments can give you huge gains too in the months to come.But no one can be hundred percent sure. That is why you will have to take risk.No need to say that invest only if you are flush with surplus funds.
10. Monitor rigorously:
We are living in a global village. Any important event happening in any part of the world has an impact on our financial markets. Hence we need to constantly monitor our portfolio and keep affecting the desired changes in it. If you can't review your portfolio due to time constraint or lack of knowledge, then you should take the help of a good financial planner or someone who is capable of doing that. 'If you can't even do that, then stock investing is not for you. Better put your money in safe or less-risky instruments.
Posted by VALUEPICK at 6:15 AM
Tuesday, July 21, 2015
SEBI Research Analysts Registration Status of the Author : Not Registered
Status of shares of Bluestar Infotech : Holding
1) Whether the research analyst or research entity or his associate or his relative has any financial interest in the subject company - NO
2) whether the research analyst or research entity or its associates or relatives, have actual/beneficial ownership of one per cent. or more securities of the subject company, at the end of the month immediately preceding the date of publication of the research report or date of the public appearance -NO
3) ) whether the research analyst or research entity or his associate or his relative, has any other material conflict of interest at the time of publication of the research report or at the time of public appearance-NO
4) whether RA or its associates have received any compensation from the subject company in the past twelve months -NO
5) Whether it or its associates have managed or co-managed public offering of securities for the subject company in the past twelve months - NO
6) whether it or its associates have received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months- NO
7) whether it or its associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months -NO
8) Whether it or its associates have received any compensation or other benefits from the subject company or third party in connection with the research report.-NO
9) Whether it or its associates have received any compensation from the subject company in the past twelve months-NO
10) whether the subject company is or was a client during twelve months preceding the date of distribution of the research report and the types of services provided -NO
11) Whether the research analyst has served as an officer, director or employee of the subject company-NO
12) whether the research analyst or research entity has been engaged in market making activity for the subject company- NO
BLUE STAR INFOTECH LTD - is one stock suggested around Rs.72 which hits its 52 week high today @ Rs.258. For the quarter ended June , on a consolidated basis ,company reported a top line of Rs.74 Cr v/s Rs.64 Cr and a net profit of Rs.7.26 Cr v/s Rs.3.10 Cr. Quarterly EPS is Rs.6.50 v/s Rs.2.54 compared with same period of last year..Company also decided to purchase the remaining 51 % stake in Blue Star Infotech Business Intelligence and Analytics Pvt Ltd ( Read it HERE).
In case of many small/mid size IT companies , promoter quality is a major concern . But I believe , in the case of Blue star Infotech that risk is minimum
Link to a recent interview of MD. HERE
Link to Latest Result HERE
Old posting HERE
Posted by VALUEPICK at 8:01 PM
Saturday, July 18, 2015
No modern-day investment "sage" is better known than Peter Lynch. Not only has his investment approach successfully passed the real-world performance test, but he strongly believes that individual investors have a distinct advantage over Wall Street and large money managers when using his approach. Individual investors, he feels, have more flexibility in following this basic approach because they are unencumbered by bureaucratic rules and short-term performance concerns.
Mr. Lynch developed his investment philosophy at Fidelity Management and Research, and gained his considerable fame managing Fidelity’s Magellan Fund. The fund was among the highest-ranking stock funds throughout Mr. Lynch’s tenure, which began in 1977 at the fund’s launching, and ended in 1990, when Mr. Lynch retired.
Peter Lynch’s approach is strictly bottom-up, with selection from among companies with which the investor is familiar, and then through fundamental analysis that emphasizes a thorough understanding of the company, its prospects, its competitive environment, and whether the stock can be purchased at a reasonable price. His basic strategy is detailed in his best-selling book "One Up on Wall Street" which provides individual investors with numerous guidelines for adapting and implementing his approach. His most recent book, "Beating the Street" [Fireside/Simon & Schuster paperback, 1994], amplifies the theme of his first book, providing examples of his approach to specific companies and industries in which he has invested. These are the primary sources for this article.
The Philosophy: Invest in What You Know
Lynch is a "story" investor. That is, each stock selection is based on a well-grounded expectation concerning the firm’s growth prospects. The expectations are derived from the company’s "story"--what it is that the company is going to do, or what it is that is going to happen, to bring about the desired results.
The more familiar you are with a company, and the better you understand its business and competitive environment, the better your chances of finding a good "story" that will actually come true. For this reason, Lynch is a strong advocate of investing in companies with which one is familiar, or whose products or services are relatively easy to understand. Thus, Lynch says he would rather invest in "pantyhose rather than communications satellites," and "motel chains rather than fiber optics."
Lynch does not believe in restricting investments to any one type of stock. His "story" approach, in fact, suggests the opposite, with investments in firms with various reasons for favorable expectations. In general, however, he tends to favor small, moderately fast-growing companies that can be bought at a reasonable price.
Lynch’s bottom-up approach means that prospective stocks must be picked one-by-one and then thoroughly investigated--there is no formula or screen that will produce a list of prospective "good stories." Instead, Lynch suggests that investors keep alert for possibilities based on their own experiences--for instance, within their own business or trade, or as consumers of products.
The next step is to familiarize yourself thoroughly with the company so that you can form reasonable expectations concerning the future. However, Lynch does not believe that investors can predict actual growth rates, and he is skeptical of analysts’ earnings estimates.
Instead, he suggests that you examine the company’s plans--how does it intend to increase its earnings, and how are those intentions actually being fulfilled? Lynch points out five ways in which a company can increase earnings: It can reduce costs; raise prices; expand into new markets; sell more in old markets; or revitalize, close, or sell a losing operation. The company’s plan to increase earnings and its ability to fulfill that plan are its "story," and the more familiar you are with the firm or industry, the better edge you have in evaluating the company’s plan, abilities, and any potential pitfalls.
Categorizing a company, according to Lynch, can help you develop the "story" line, and thus come up with reasonable expectations. He suggests first categorizing a company by size. Large companies cannot be expected to grow as quickly as smaller companies.
Next, he suggests categorizing a company by "story" type, and he identifies six:
Analysis is central to Lynch’s approach. In examining a company, he is seeking to understand the firm’s business and prospects, including any competitive advantages, and evaluate any potential pitfalls that may prevent the favorable "story" from occurring. In addition, an investor cannot make a profit if the story has a happy ending but the stock was purchased at a too-high price. For that reason, he also seeks to determine reasonable value.
Here are some of the key numbers Lynch suggests investors examine:
Year-by-year earnings: The historical record of earnings should be examined for stability and consistency. Stock prices cannot deviate long from the level of earnings, so the pattern of earnings growth will help reveal the stability and strength of the company. Ideally, earnings should move up consistently.
Earnings growth: The growth rate of earnings should fit with the firm’s "story"--fast-growers should have higher growth rates than slow-growers. Extremely high levels of earnings growth rates are not sustainable, but continued high growth may be factored into the price. A high level of growth for a company and industry will attract a great deal of attention from both investors, who bid up the stock, and competitors, who provide a more difficult business environment.
The price-earnings ratio: The earnings potential of a company is a primary determinant of company value, but at times the market may get ahead of itself and overprice a stock. The price-earnings ratio helps you keep your perspective, by comparing the current price to most recently reported earnings. Stocks with good prospects should sell with higher price-earnings ratios than stocks with poor prospects.
The price-earnings ratio relative to its historical average: Studying the pattern of price-earnings ratios over a period of several years should reveal a level that is "normal" for the company. This should help you avoid buying into a stock if the price gets ahead of the earnings, or sends an early warning that it may be time to take some profits in a stock you own.
The price-earnings ratio relative to the industry average: Comparing a company’s price-earnings ratio to the industry’s may help reveal if the company is a bargain. At a minimum, it leads to questions as to why the company is priced differently--is it a poor performer in the industry, or is it just neglected?
The price-earnings ratio relative to its earnings growth rate: Companies with better prospects should sell with higher price-earnings ratios, but the ratio between the two can reveal bargains or overvaluations. A price-earnings ratio of half the level of historical earnings growth is considered attractive, while relative ratios above 2.0 are unattractive. For dividend-paying stocks, Lynch refines this measure by adding the dividend yield to the earnings growth [in other words, the price-earnings ratio divided by the sum of the earnings growth rate and dividend yield]. With this modified technique, ratios above 1.0 are considered poor, while ratios below 0.5 are considered attractive.
Ratio of debt to equity : How much debt is on the balance sheet? A strong balance sheet provides maneuvering room as the company expands or experiences trouble. Lynch is especially wary of bank debt, which can usually be called in by the bank on demand.
Net cash per share: Net cash per share is calculated by adding the level of cash and cash equivalents, subtracting long-term debt, and dividing the result by the number of shares outstanding. High levels provide a support for the stock price and indicate financial strength.
Dividends & payout ratio: Dividends are usually paid by the larger companies, and Lynch tends to prefer smaller growth firms. However, Lynch suggests that investors who prefer dividend-paying firms should seek firms with the ability to pay during recessions (indicated by a low percentage of earnings paid out as dividends), and companies that have a 20-year or 30-year record of regularly raising dividends.
Inventories: Are inventories piling up? This is a particularly important figure for cyclicals. Lynch notes that, for manufacturers or retailers, an inventory buildup is a bad sign, and a red flag is waving when inventories grow faster than sales. On the other hand, if a company is depressed, the first evidence of a turnaround is when inventories start to be depleted.
When evaluating companies, there are certain characteristics that Lynch finds particularly favorable. These include:
Characteristics Lynch finds unfavorable are:
Portfolio Building and Monitoring
As portfolio manager of Magellan, Lynch held as many as 1,400 stocks at one time. Although he was successful in juggling this many stocks, he does point to significant problems of managing such a large number of stocks. Individual investors, of course, will get nowhere near that number, but he is wary of over-diversification just the same. There is no point in diversifying just for the sake of diversifying, he argues, particularly if it means less familiarity with the firms. Lynch says investors should own however many "exciting prospects" that they are able to uncover that pass all the tests of research. Lynch also suggests investing in several categories of stocks as a way of spreading the downside risk. On the other hand, Lynch warns against investment in a single stock.
Lynch is an advocate of maintaining a long-term commitment to the stock market. He does not favor market timing, and indeed feels that it is impossible to do so. But that doesn’t necessarily mean investors should hold onto a single stock forever. Instead, Lynch says investors should review their holdings every few months, rechecking the company "story" to see if anything has changed either with the unfolding of the story or with the share price. The key to knowing when to sell, he says, is knowing "why you bought it in the first place." Lynch says investors should sell if:
For Lynch, a price drop is an opportunity to buy more of a good prospect at cheaper prices. It is much harder, he says, to stick with a winning stock once the price goes up, particularly with fast-growers where the tendency is to sell too soon rather than too late. With these firms, he suggests holding on until it is clear the firm is entering a different growth stage.
Rather than simply selling a stock, Lynch suggests "rotation"--selling the company and replacing it with another company with a similar story, but better prospects. The rotation approach maintains the investor’s long-term commitment to the stock market, and keeps the focus on fundamental value.
Summing It Up
Lynch offers a practical approach that can be adapted by many different types of investors, from those emphasizing fast growth to those who prefer more stable, dividend-producing investments. His strategy involves considerable hands-on research, but his books provide lots of practical advice on what to look for in an individual firm, and how to view the market as a whole.
Lynch sums up stock investing and his outlook best:
"Frequent follies notwithstanding, I continue to be optimistic about America, Americans, and investing in general. When you invest in stocks, you have to have a basic faith in human nature, in capitalism, in the country at large, and in future prosperity in general. So far, nothing’s been strong enough to shake me out of it."
Posted by VALUEPICK at 6:55 AM