Friday, February 4, 2011

An update on stuff..

Hello people. Well, you have had to bear with me and my blog for quite some time now. I had discussed some stock ideas in various posts before. So, lemme put out an update about what happened to all those stocks.

I had written about MTNL being a value trap on 21st April, 2010. The price has moved down from Rs.74 to about Rs.50. I still maintain it is a value trap. A company i will probably never look at, as an investment candidate.

I had written about Kesar Enterprises demerger on 21st April, 2010. The demerger is through, shares of new company Kesar Terminals have been alloted and listed. I did earn about 15% in the entire transaction. However, there was a huge delay in the entire demerger and listing process. What was expected to happen in 2 months took more than 6 months. The delay has hit my annualised returns :-( I have been a seller of Kesar Terminals above Rs.115. Kesar Enterprises was sold off around the ex-date itself at an average price of Rs.62.

I had written about Aditya Birla Chemicals being really cheap, on 27th April, 2010. Since then, the price has moved up from Rs.87 to Rs.140. The company is entering a capex phase, which could depress return ratios for a couple of years. It is still not very expensive. I do not have any position in the stock at present.

I had written about LG Bala and Gujarat Alkalies as shorter term positions on 27th April, 2010. Both the stocks moved up. I have closed my positions in both with profit of about 30% and 10% respectively.

I had written about Ashiana Housing on 28th May, 2010. The stock moved up well and was beaten down again as problems with Lavasa started. Delays caused by Lavasa debacle could hit profitability for the medium term for sure. I still maintain it to be an excellent company. 

I had written about ACGL on 2nd June, 2010. The company reported phenomenal numbers in the recent quarter. Looks like Murphy's Law is not longer hitting the company. :-) The price has moved up from Rs.230 to Rs.350. Though margin of safety does not appear to be high at present market cap, there could be triggers like a merger happening, which could help unlock more value in the stock.

I had written about Phillips Carbon on 22nd June, 2010, in which I had said that even though it seemed to be in a sweet spot, I would not take a position in it. The stock price has moved down from Rs.186 to Rs.130 since then. However, here, I have been proven right for all the wrong reasons! The company did not report good numbers, as was expected. Further, a likely large acquisition by the company has dampened sentiment about the stock. Got lucky here! :-)

I had written about Binani Cement delisting on 25th November, 2010. The price has moved up from Rs.83 to Rs.91 since then. The reverse book building will start on 7th February, 2011. I intend to tender my shares at Rs.110. Let us see how it goes..

I had written about Dai Ichi Karkaria on 26th November, 2010. It is indeed an interesting case. Few readers also put across interesting points that I was not aware of. The price has moved down from Rs.48 to Rs.43. Worth another and even more indepth look for sure.

I had written about Alembic demerger on 31st December, 2010. I had advocated buying it below Rs.55. The price had not moved and looks like it wont come to my price at all. In that case, I will give this opportunity a miss.

I had written about Jyoti Structures on 12th January, 2011. I got out of the position on the ex-date itself (in hindsight, I got out at a very good price). I will be applying to the rights issue. Lets see how this one goes.

Well, there you go folks. Hope you had a good time at the blog. New ideas are a bit hard to come by still. Am looking at a few really interesting candidates. Will update soon.

Cheers and happy investing!!


Raja said...

Hi Neeraj,

I hope by now you might have realized, am a die hard a fan of your blog.

Am still new to the field of investing and have been doing kind of 'just reading' since last one year. May be i should admit to a li'l bit of trading too :)

Having said that, i have come to appreciate the importance of long term investing or buy and hold kind of investing for which i have been patiently building my corpus since last year.

So, the one thing that am expecting (requesting!) from your blog is, more posts on such kind of companies. I think by their nature they won't be always available cheap. But waiting is not a problem for me. Being a salaried person i don't have a huge corpus to invest at one go. Waiting 3-5 years and investing in such companies when they present better value is ok by my opinion. In the meanwhile am more than happy to let my money earn/save me interest outgo in my home loan OD account.


Anonymous said...

hi neeraj,

wrt binani 4 investors who hold
~ 24% will decide the exit price. if u tender at 110 & the exit price is 100 ur shares will be returned & u will be stuck with the shares for 2-3 months till the exit offer for the remaining shareholders comes. it makes sense to tender at a lower price bcoz the exit price discovered is offered to all the shareholders who tender at or below the exit price.



Neeraj Marathe said...

Hi Raja,
Thnx a ton for ur appreciation. I shall try my level best to put up some long term compounding stories.

Neeraj Marathe said...

Hi Anil,
What u say makes perfect sense..

Anonymous said...

Neeraj.... Please tell us something siemens open offer. Is it the right time to exit ??

Also how is PSL.

I am new to investment and want to learn more about value investment

Thanks for your posts

Neeraj Marathe said...

Hi anonymous,
Siemens open offer is at Rs.930, while CMP is at Rs.850. They r offering to acquire about 20% of the 45% non-promoter holding. Thats roughly 45% acceptance. It makes no sense to buy at CMP, but if i were holding, i would want to tender in the open offer.
If one looks at the shareholding pattern, LIC holds just over 13%. If LIC does not tender, or tenders very less, the acceptance ratio would go even higher. All in all, i thinks its a good deal to participate in this open offer.
I have not seen PSL, so cant say..

excel_monkey said...

Looking at the current market price and participation of one of the largest non promoter shareholder in earlier buyback I think Binani will de-list at 90.


Anonymous said...

Hi Neeraj

Thanks a lot for your list of books. Much hard to digest them though ;)

I may sound cynical, but your report card is warning signal. Lots of positive or neutral outcome but not loss of money or bad trade over one year.....

Neeraj Marathe said...

Hi Excel,
Yup, i agree, that could very well be the case..

Neeraj Marathe said...

Hi Anonymous,
Thnx, i agree that the books are quite hard to digest..
And what warning signal r you talking bout? That one shudnt read my blog? :-D
Regarding positive trades n all, maybe i got plain lucky!

Kiran said...

Hi Neeraj,

I checked out your MTNL analysis. I had a couple of questions -

There are two items which caught my eye in the P&L statement of MTNL which caused a steep loss for the year ending 31st Mar 2010 -

a) Employees' Remuneration for retirement Benefits-Provisions
This was Rs 29,981 mn 2010 versus Rs. 6880 mn in 2009.

b) Depreciation for 2010 was Rs. 17594 mn vs Rs. 6988 mn in 2009.

Digging a little deeper,

i) With respect to a) There is a difference of Rs. 23000mn in the provision for retirement benefits (FY10-FY09), which has severely depressed earnings. Here is where my lack of accounting background kicks in. Isn't this just a one-time provision (I looked up schedule P, which says its a Pension contribution) and will not appear in the year ending March 2011 P&L? And therefore, wouldn't the earnings figure improve drastically?

ii) With respect to b), the depreciation figure difference (FY10-FY09) is almost equal 10000mn precisely because Rs. 10000mn has been amortised for FY10 year (and will be for the next 10 years) due to 3G & BWA License fees (so, technically, MTNL has already paid out the 3G fees) . So, profit will be understated, but we'll have positive cash flows from operations. Also, cash on FY10 still remains (as 3G fees has already been paid out).

I agree with your analysis on MTNL losing market share, but not necessarily that they would burn cash at a drastic rate precisely because of the reasons stated above.

Again, only cash per share is Rs. 85 and not considering rest of its assets. I am thinking of pulling the trigger at around Rs. 30, if it ever comes down to that price (just to ensure there is a huge MOS).

However, I would love to hear your thoughts on my analysis. And I am pretty sure I'll learn something new from your insights.


Neeraj Marathe said...

Hi Kiran,
Interesting thing which really stands did u calculate cash/share as 85 bucks? if you see the Sep10 result, cash is Rs.732 cr and investments are Rs.475 cr. thats a total of bout Rs.1200 cr, which is just bout 20 bucks per share, even after considering 'investments'..(11000 cr cash has gone out for 3G)..
will get back to you on the accounting part..

Kiran said...

Hi Neeraj,

I made a pretty huge blunder. It is not Rs. 85 :) Thanks for pointing it out..its close to Rs. 18 per share. My bad.

I think I am moving on to your hypothesis, especially after I read this -

1) They have not made any provisions for amounts to be received from BSNL and other Govt. agencies. Pretty much pathetic accounting practice.
2) They are yet to receive money from CWG to the tune of 302 crores. But they have recognised the income before receiving it. I think GAAP body should sue them.

And the provisions for pension liabilities appear again in Sep P&L. I guess this is a recurring item then...and with increasing no. of ppl moving towards retirement in MTNL, we have serious trouble ahead.

And they are burning 605cr per quarter in Operations. Whoa!

One question I had though - they can sell the 3G allocated to them, right? (I know they won't, but still should account for something!)

Neeraj Marathe said...

Hi Kiran,
Very interesting info on the accounting side man..quite surprising too! thnx..