Friday, April 27, 2007

Trade Loans -

Came across this interesting site - that allows people to trade loans, just like they trade in various goods on ebay. In short, an online auction of personal loans upto USD 25,000 per person. Innovative, isnt it? Feasible? Well, total transactions reached USD 50 million...and rolling!

Got the link from Daily Speculations.

Wednesday, April 25, 2007

How serious is this buyback offer? - GTL !

The Board of GTL (the erstwhile Global Telesystems) today approved the following:

GTL Ltd has informed BSE that the Board of Directors of the Company at its meeting held on April 25, 2007, inter alia, has recommended following:

1. Buyback of Company's shares at Rs 300 per share.
2. Set aside an amount of Rs 275 crores for the buyback.
3. The buyback is subject to the approval of shareholders and regulatory authorities.

However there are the few questions that come to one's mind -

1). How serious is this offer given that the current market price is only Rs.185, a good 40% below the offer price?

2). If the company wished, it could have simply bought back shares from the open market, I think SEBI allows companies to buyback 5% of their equity from the secondary market in a year without triggering the open offer.

3). If at all the buyback offer is serious, why did the share price did not witness a substantial increase today?

4). In fact, the scrip witnessed huge volumes today, six times more than the daily average over the last 2 weeks and more importantly witnessed heavy supply at higher levels which resulted in the share price falling down from a high of around Rs.193 to close at Rs.185.

GTL has a poor track-record and was reported to be one of the Ketan Parekh's favorite stocks in 2000-01. After the crash it had witnessed close to 98% price erosion....from a high of Rs.3,500 it fell to as a low as Rs.65-70 per share. And, I think this release on the BSE is completely non-serious. The company is not likely to buy 9.1 million shares @ Rs.300...and spend Rs.275 crore...when it can easily buy the same from the market at less than Rs.200 crore.

Investors looking to invest into this company should tread caution....

Warren Buffet and the 2-20 Crowd !

An interesting analysis of Warren Buffet's investment performance by

Here's an excerpt:

Who am I to question the Great One? He’s produced 21% CAGR for 40 years and I don’t even use my real name when I write blog postings. But I have to push back a little on Buffett’s entertaining, but somewhat misleading salt-of-the-earth populism. It certainly sells tickets at the Qwest centre, but it’s an unhelpful contribution to the important debate over investment management fees.

In fairness, Buffett is one of then world’s most successful producers of alpha - beating the S&P500 by an average of 10%p.a. over the past 4 decades. But he takes his usual swipe at the “2-and-20 crowd” in his recently released 2006 investment letter. We commend his implicit emphasis on alpha as the raison d’etre for fees, but he is too quick to assume hedge funds simply deliver beta......

Read the entire article here.

Monday, April 23, 2007

Yuan continues to appreciate v/s USD....

The Chinese Yuan has seen a one-sided movement against the USD. Over the past one and a half years, it has witnessed an appreciation of close to 7 per cent. How significant is this? News reports suggest that it is quite significant, so far as the Chinese garment industry is concerned. Came across a few articles that highlight the same:

1). "China's textile industry says it loses 8.2 billion yuan ($1.1 billion) of annual profit for each percentage point rise in the currency"

2). "The textiles sector, with average gross profits of five to 10 percent will cease to be as lucrative once the yuan appreciates by 5 percent"

3). Growth in China's textile industry slows

Does this bode well for Indian textile companies? Maybe, especially if the sharp appreciation in Yuan forces Chinese companies to raise prices. However, one important thing that can nullify the above is a continuation in the appreciation of the rupee vis-a-vis the dollar, as seen in the last one month or so.

Watch the currency movements closely over the next few months as also the export numbers, both from India and China to the US.

Textile scrips have been big underperformers on the bourses over the past one year. Scrips like Arvind Mills, Alok Industries, Gokaldas Exports, House of Pearl Fashions, etc. all are down by anything between 15-50 per cent. With prices at their 52-week lows and valuations looking down the barrel, it wont be a bad idea to invest into some of these. A Contrarion Call.

Its Showering Takeover Deals !

1). Barclays takeover of ABN Amro - USD 91 bln

2). AstraZeneca to buy MedImmune - USD 15.6 bln

3). Bank of America to ABN's LaSelle - USD 21 bln

4). Mittal Steel takesover Sicartsa for USD 1.4 bln

Saturday, April 21, 2007

Research house recommendations? Crack'em!

Was reading a research report by a firm called - First Global (does it sound like a familiar name?? flash back 2001!!!). Was awestruck with their latest recommendation.

Petronet LNG - Long-Term Moderate Outperform.

Wonder how many of their clients wud have understood what is to be done with Petronet LNG, given the kind of recommendation??? You either say - BUY/HOLD/SELL. What on this earth does LONG-TERM-MODERATE-OUTPERFORM mean??

FG usually offers ratings from the list of following recommendations (which in itself is quite a long list of recommendations):

Positive ratings
- Buy
- Buy at Declines
- Outperform

Neutral ratings
- Hold
- Marketperform

Negative ratings
- Sell
- Sell into strength
- Underperform
- Avoid a new addition to the list. All the best FG clients.

Thursday, April 19, 2007

Subros: A Value pick.

Have written about Subros in the past. Link 1 & 2.

Came across an article on the same in the Hindu Business Line. Here.

My view on the scrip remains intact (Value Pick) and I continue to hold the scrip with a price target of Rs.300+.

Sunday, April 08, 2007

Control Raj making a strong comeback?? (First commodities, industrial goods and now cricket)

Here's the [BANNED] list (pls add more in case i've missed out a few):

1). Raw jute futures
2). Export of Pulses
3). Sugar exports
4). Futures trading in Tur & Urad
5). Futures trading in Wheat and Rice
6). Freeze on Cement prices

There is also a [pending] list:

1). Futures trading in Maize
2). Natural rubber futures
3). The Big One - Ban on futures trading in all commodities

Well, if we thought that control-raj is restricted to agro-commodities and industries goods, think again! The Board of Control for Cricket in India recently released a few guidelines, primarily to save its face following the humiliating defeat of the Indian cricket team at this year's Cricket World Cup. Some of the guidelines, which are similar in nature to the above cases are:

1). No. of endorsements per player restricted to THREE
2). No brand can hire more than two cricketers
3). Players to take prior permission from the Cricket Board before signing endorsement deals

What the BCCI aims to do by this is really questionable?

Because, the problem of non-performance in no way can lie with endorsement deals. Cricketers who get a lot of endorsement deals are the ones who are seen as good players or who have performed well in recent times. So really speaking if a player aint playing well, will the sponsor still continue paying top dollars to the underperformer? I think not. Its simple advertising economics. And to top it all, if the Cricket selection committee were to think that a player is not giving his best and is instead concentrating more on sponsorship deals, then they can simply DROP HIM from the next series. Once dropped, a player holds not much of a brand value for the sponsor. Earnings from sponsorship deals will automatically drop and the pressure to perform will mount.

But ofcourse, the BCCI needs to be seen to be doing something....and thats precisely what it is doing, much like some of the Ministeries at the Centre.

CONTROL RAJ coming back with all the expected (read: Anti-Market Economy) effects!