Saturday 31 October 2015

Stock Tips Free Trial Scam Exposed

With time, Despite DND being in force almost every stock market trader/investor is receiving phone calls and sms particularly from Indore or Madhya Pradesh, Gujarat and Rajasthan among other places to register for free trial in their stock market advisory.

Forget being registered with SEBI these guys don't even have a website or a company name.

 This is a huge scam that is going on and today we are going to expose their modus operandi.

First of all, The scamsters purchase a "DATABASE" of demat and trading account holders, Let us say they purchased a huge database of account holders and out of that 25 thousand are active traders.

They will now contact the traders, Say out of 25 thousand 50% of them are not interested but the remaining 50% are interested in the trial since it is free.

As a result of it they will be getting a Hot Tip on some stock that is going to report its results on the day as decided by the Tip Provider and it will be a proper call with SL and Target.

Now they will either be holding a Reseller Account or a normal account in Bulk Sms Provider services and they are ready to send the trial... For example yesterday Larsen & Toubro came out with numbers and it has a habit of reacting 3-5% on the results day.

What these scamsters will do now is very interesting, They will make a 50:50 list out of the 12500 people who registered for the trial.

The first 6250 people will receive a Buy Call in L&T Futures or even cash with a stop-loss and target and the next 6250 people will receive a Sell Call with stop-loss and target.

Before giving the call, They will compel you to trade on it so that you can join the service, and they will claim to have inside info about the results.

The results of Larsen & Toubro will be declared and the stock will react either way, Like it fell yesterday they will start calling up people who got the sell call and ask them to join their paid services since they gave the Super Hit Trial. The charges will range from anything like 25 thousand per month to per year depending on the greed of the scamsters.

They will now keep repeating the phone calls and win your trust that they are the best in class and they will give the bestest of calls which will make you filthy rich.

Sadly, almost 50% will fall for it but lets assume only 30% people or 1875 people to be precise fall for the scam, A total of 1875*25000 = 4,68,75,000.00 almost 5 Crores will be netted by these scamsters.

Their investment was of only about 40,000 (20,000 for database, 10,000 for sms service, 10,000 for call center type hired staff)

They will simply switch off the phone from which they talked with the people who got the Buy Call.

People who paid Rs 25,000 will also not get any call from their side and the phone number will be switched off.

The traders who bought L&T cannot take any action because they didn't pay them a penny and got a free tip.

The people who paid 25,000 for paid services will not take any action because they would have got a SMS from the same number which had the terms of Profit Sharing out of the call and some might even have traded and earned will think let it be.

They will re-use the database with other names and locations and repeat the same modus operandi and this time might again earn 5 crores with the same database.

It is not wrong to take the trial for Free as long as you just track the movement of the calls but it is very dumb to take a Free Trial and decide to join the Paid Services of an advisory who is not registered with SEBI and is also not having a website for that matter.

Jaago Grahak Jaago, Do not fall prey to such Scamsters and avoid trusting their words.

Note: I am not defaming all advisories and analysts out there, There are some very genuine people and it is easy to make out who is genuine and who is fraud.

Friday 30 October 2015

UPDATE: Mindteck Ltd

MindTeck LTD
Mindteck Ltd. posted on the blog at 67 on 3rd December 2014.
The stock has rallied to 130+ today and up 94% in around 11 months.
In my blog post i had written about expecting the stock to hit Rs 150 in the mid-term and MindTeck has almost reached there now, With the special circuit filters by BSE the upside will be capped in Mindteck.
At current price of around 130 Mindteck still has some upside potential left but now i guess it's the right time to book partial profits/book invested capital or even book out entirely in Mindteck and some investors who still want to hold for long-term should hold only the free shares.

Friday 23 October 2015

Camphor & Allied Products Ltd - Re-rating Candidate

The Ace Investor
Camphor & Allied Products Ltd
  Listed on BSE: 500078
Currently trading around 400 with a market cap of around 200 crores.
Promoters hold 57.66% stake
Total Debt is around 100 crores, Total Reserves around 128 crores.
Interest coverage ratio is more than 4.

Camphor & Allied Products Ltd (CAPL) is an Indian specialty chemical company, It is the largest exporter of specialty aroma chemicals which finds application in a wide range of products including deo & perfumes, cosmetics, fabric care products and other personal care products.

Fragrance chemical portfolio of the company includes: Astromeran, Astrone, Astrolide, Capinone, Dihydroterpineol, Dihydroterpinyl Acetate, Fenchone, Isoborneol, Isobornyl Acetate, Ketone 101, Terpineol, Terpinyl Acetate, Citwanene, Isolongifolene, Longifolene, Camphor.

CAPL is having two manufacturing units at Bareily U.P and Vadodara, Gujarat.

CAPL is in a tie-up with Agan Aroma & Fine Chemicals, a subsidy of Makhteshim Agan which itself is now controlled by Chem China which is the largest Chemicals company in China.

Products manufactured at CAPL vadodara plant is marketed by Agan worldwide and Agan is also providing technology assistance to CAPL.

CAPL is now promoted by India's largest fragrance manufacturer Oriental Aromatics Limited, It took over the company by acquiring stake at Rs 167 per share.

 Lets take a look at Camphor's financial snapshot since 2005

As you can see CAPL has grown well from FY05 to FY12, Sales of 74 crores have now increased to 355+ crores.

CAPL is trading only at 200 crore market cap with sales at 355+ crores. 

CAPL has an EPS of around 37, And in the coming quarters with the raw-material costs around its lows, CAPL should easily expand their net profit this FY and report better numbers.

Tie-up with Chem China somewhat hedges the China threat that specialty chemical companies otherwise face.

The total share capital of the company is only 51,33,674 and the promoter holds 57.66% stake which means only about 21 lac shares are available in the market.

Though there are no Public shareholders holding more than 1%, The annual report reveals the top shareholders to be Hirji Eddie Nagarwalla who held 0.87% at end of FY15 and another major shareholder is Keva Constructions Private Limited which holds 0.96% stake in Camphor (CAPL).

A little use of Google will show that Keva Constructions is a subsidiary of S H Kelkar which is a direct peer to Camphor & Allied Products Ltd and a fragrance manufacturer. 

Recently, the IPO of Indigo Airlines (Interglobe Aviation) triggered Spicejet to rally more than 60% in few days just because Indigo was commanding good valuation, However Spicejet at large has been in financial trouble and it was given clearance to fly only recently and there is not much clarity on how long it will remain profitable.

The major trigger for re-rating in CAPL is the IPO of fragrance and aroma chemical manufacturer S H Kelkar which opens on 28th October 2015.

CAPL with annual EPS of around 37 and current market price of 400 is trading at just under 11 P/E with a good track record and good management.

 While S H Kelkar with an annual EPS of 4.13 is coming out with an issue price of 170 valued at 41 times to its FY15 EPS.

At present, CAPL is trading at 11 P/E, If we apply the 41 P/E that S H Kelkar should be getting with their IPO the share price of CAPL should be at 1500+.

All in all, Looking at the issue price of S H Kelkar it is obvious that Camphor & Allied Products Ltd deserves major re-rating and is a value pick at current levels of around 400 trading at 11 P/E and having MCAP/Sales ratio at only 0.56.

Note: The above is not a research report but information as available on public domain and it should not be treated as a research report.

Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”

Disclosure: It is safe to assume that i might have Camphor & Allied Products Ltd in my portfolio and hence my point of view can be biased. Readers should consult their financial advisory before any investments.


Tuesday 20 October 2015

Attention: New Value Pick

 I know everyone is waiting to read about a new stock on the blog.

Wait is over guys!!

New stock will be updated on our blog this Friday at 3:20 PM
during market hours (i.e. 23 October 2015)
Happy Investing!

Saturday 17 October 2015

Investment Styles of 10 Great Investors.


1- John Jack Bogle - Investment Style
In simple terms, Jack Bogle's investing philosophy advocates capturing market returns by investing in broad-based index mutual funds that are characterized as no-load, low-cost, low-turnover and passively managed. He has consistently recommended that individual investors focus on the following themes: 
  • The primacy of investing simplicity 
  • Minimizing investment-related costs and expenses
  • The productive economics of a long-term investment horizon
  • A reliance on rational analysis and an avoidance of emotions in the investment decision-making process
  • The universality of index investing as an appropriate strategy for individual investors

2- Warren Buffett - Investment Style
Warren Buffett's investing style of discipline, patience and value has consistently outperformed the market for decades.

John Train, author of "The Money Masters"(1980), provides us with a succinct description of Buffett's investment approach: "The essence of Warren's thinking is that the business world is divided into a tiny number of wonderful businesses – well worth investing in at a price – and a large number of bad or mediocre businesses that are not attractive as long-term investments. Most of the time, most businesses are not worth what they are selling for, but on rare occasions the wonderful businesses are almost given away. When that happens, buy boldly, paying no attention to current gloomy economic and stock market forecasts."

Buffett's criteria for "wonderful businesses" include, among others, the following:
  • They have a good return on capital without a lot of debt.
  • They are understandable.
  • They see their profits in cash flow.
  • They have strong franchises and, therefore, freedom to price.
  • They don't take a genius to run.
  • Their earnings are predictable.
  • The management is owner-oriented.

3- David Dreman - Investment Style
It is reported that Dreman came to contrarian investing the hard way. In 1969, Dreman, a junior analyst at the time, was following the crowd as the shares of companies with negligible earnings skyrocketed. He is quoted as saying, "I invested in the stocks du jour and lost 75% of my net worth." As a result of that painful lesson of following the herd, he became fascinated with how psychology affects investor behavior and became a contrarian investor.

In an interview for Kiplinger's Personal Finance Magazine in 2001he explained his approach: "I buy stocks when they are battered. I am strict with my discipline. I always buy stocks with low price-earnings ratios, low price-to-book value ratios and higher-than-average yield. Academic studies have shown that a strategy of buying out-of-favor stocks with low P/E, price-to-book and price-to-cash flow ratios outperforms the market pretty consistently over long periods of time."

4- Philip Fisher - Investment Style
Fisher achieved an excellent record during his 70 plus years of money management by investing in well-managed, high-quality growth companies, which he held for the long term. For example, he bought Motorola stock in 1955 and didn't sell it until his death in 2004.

His famous "fifteen points to look for in a common stock" were divided up between two categories: management's qualities and the characteristics of the business.

Important qualities for management included integrity, conservative accounting, accessibility and good long-term outlook, openness to change, excellent financial controls, and good personnel policies. 

Important business characteristics would include a growth orientation, high profit margins, high return on capital, a commitment to research and development, superior sales organization, leading industry position and proprietary products or services.

Philip Fisher searched far and wide for information on a company. A seemingly simplistic tool, what he called "scuttlebutt," or the "business grapevine," was his technique of choice.

He devotes a considerable amount of commentary to this topic in "Common Stocks And Uncommon Profits". He was superb at networking and used all the contacts he could muster to gather information and perspective on a company. He considered this method of researching a company to be extremely valuable.

5- Benjamin GrahamInvestment Style
Morningstar's online Interactive Classroom carries this anecdote about the results of Ben Graham's investing style:

"In 1984, Warren Buffet returned to Columbia to give a speech commemorating the fiftieth anniversary of the publication of "Security Analysis". During that speech, he presented his own investment record as well as those of Ruane, Knapp, and Schloss [other successful investment managers who were students of Graham at Columbia]. In short, each of these men posted investment results that blew away the returns of the overall market. Buffett noted that each of the portfolios varied greatly in the number and type of stocks, but what did not vary was the managers' adherence to Graham's investment principles."
It is difficult to encapsulate Benjamin Graham's investing style in a few sentences or paragraphs. Readers are strongly urged to refer to his "The Intelligent Investor" to obtain a more thorough understanding of his investment principles.

In brief, the essence of Graham's value investing is that any investment should be worth substantially more than an investor has to pay for it. He believed in thorough analysis, which we would call fundamental analysis. He sought out companies with strong balance sheets, or those with little debt, above-average profit margins, and ample cash flow.

He coined the phrase "margin of safety" to explain his common-sense formula that seeks out undervalued companies whose stock prices are temporarily down, but whose fundamentals, for the long run, are sound.

The margin of safety on any investment is the difference between its purchase price and its intrinsic value. The larger this difference is (purchase price below intrinsic), the more attractive the investment - both from a safety and return perspective - becomes. The investment community commonly refers to these circumstances as low value multiple stocks (P/E, P/B, P/S). 

Graham also believed that market valuations (stock prices) are often wrong. He used his famous "Mr. Market" parable to highlight a simple truth: stock prices will fluctuate substantially in value. His philosophy was that this feature of the market offers smart investors "an opportunity to buy wisely when prices fall sharply and to sell wisely when they advance a great deal."

6- William H GrossInvestment Style
In an October, 2005, commentary piece, editor, Henry K. To wrote that Bill Gross "believes that successful investment in the long-run (whether in bonds or equities) rests on two foundations: the ability to formulate and articulate a secular [long-term] outlook and having the correct structural composition within one's portfolio over time." Gross describes these foundations as having a three- to five-year forecast that forces an investor to think long term and to avoid the destructive "emotional whipsaws of fear and greed." He clearly states that "such emotions can convince any investor or management firm to do exactly the wrong thing during irrational periods in the market."Gross argues that "those who fail to recognize the structural elements of the investment equation [asset allocation, diversification, risk-return measurements and investing costs] will leave far more chips on the table for other more astute investors to scoop up than they could ever imagine."

7- Carl IchanInvestment Style
Renowned investor Wilbur Ross, Icahn's longtime friend and frequent adversary, referred to Icahn in a May 2007 Fortune Magazine article as "the most competitive person I know … he's especially good at terrorizing people and wearing down their defenses." For many corporate executives, that pretty much sums up Carl Icahn's business and investing style.

Icahn's strategy involves targeting a company he thinks is poorly run and whose stock price is trading below value. He thrives when the markets are on a downtrend; when everyone else is selling, he starts buying. He accumulates enough of an ownership position to lobby for a position on the company's board of directors.

Usually his first demand is to dump the CEO and, oftentimes, to consider breaking up the company into separate parts and selling them off. Wall Street professionals say that most of the time he is successful because he's intimidating and relentless.

He's viewed as such a surefire moneymaker that investment managers typically start buying up the company's stock, which, whether Icahn is successful or not, leaves him with healthy stock price gains.

A classic example of this phenomenon is Icahn's push in 2006 to oust CEO Richard Parsons and break up Time Warner. It didn't work out that way. When Icahn was asked about his failed attempt in a February 2007 Time Magazine interview, Icahn said "… Dick Parsons agreed to do what we wanted most - a $20 billion buyback of the stock. He did what he promised, and the stock is up 30%. That helps shareholders. Our [hedge] fund made $250 million. It's a nice way to lose."

So how has Icahn's investment style worked out? A 2007 Fortune Magazine profile reported "in its less-than-three-year existence, the Icahn Partners hedge fund has posted annualized gains of 40%; after fees, investors pocketed 28%. That 40% gain trounces the S&P 500's return of around 13%, as well as the 12% for all hedge funds calculated by the research firm."

8- Jesse L Livermore Investment Style
Jesse Livermore had no formal education or stock trading experience. He was a self-made man who learned from his winners as well as his losers. It was these successes and failures that helped cement trading ideas that can still be found throughout the market today.

Some of the major principles that he employed include:
  • Money is not made in day trading on price fluctuations. Livermore emphasized the importance of focusing on markets as a whole, rather than on individual stocks. He noted that greater success comes from determining the direction of the overall market than attempting to pick the direction of an individual stock without concern for market direction.
  • Adopt a buy-and-hold strategy in a bull market and sell when it loses momentum. Livermore always had an exit strategy in place.
  • Study the fundamentals of a company, the market and the economy. Livermore separated successful investors from unsuccessful investors by the level of effort they put into investing.
  • Investors who focus on the short term eventually lose their capital.
  • Ignore insider information; make your own independent analysis. Livermore was very careful about where he got his information and recommended using multiple sources.
  • Embrace change in adapting investing strategies to evolving market conditions.

9- Peter Lynch Investment Style
Often described as a "chameleon," Peter Lynch adapted to whatever investment style worked at the time. It is said that his work schedule, the equivalent of what we would call today "24/7," did not have a beginning and an end. He talked to company executives, investment managers, industry experts and analysts around the clock.

Apart from this punishing work ethic, Lynch did consistently apply a set of eight fundamental principles to his stock selection process. According to an article by Kaushal Majmudar, a CFA at The Ridgewood Group, Lynch shares his checklist with the audience at an investment conference in New York in 2005:
  • Know what you own.
  • It's futile to predict the economy and interest rates.
  • You have plenty of time to identify and recognize exceptional companies.
  • Avoid long shots.
  • Good management is very important - buy good businesses.
  • Be flexible and humble, and learn from mistakes.
  • Before you make a purchase, you should be able to explain why you're buying.
  • There's always something to worry about.
In picking stocks (good companies), Peter Lynch stuck to what he knew and/or could easily understand. That was a core position for him. He also dedicated himself to a level of due diligence and stock research that left few stones unturned. He shut out market noise and concentrated on a company's fundamentals, using a bottom-up approach. He only invested for the long run and paid little attention to short-term market fluctuations.

10- George Soros Investment Style

George Soros was a master at translating broad-brush economic trends into highly leveraged, killer plays in bonds and currencies. As an investor, Soros was a short-term speculator, making huge bets on the directions of financial markets. He believed that financial markets can best be described as chaotic. The prices of securities and currencies depend on human beings, or the traders - both professional and non-professional - who buy and sell these assets. These persons often act out based on emotion, rather than logical considerations.

He also believed that market participants influenced one another and moved in herds. He said that most of the time he moved with the herd, but always watched for an opportunity to get out in front and "make a killing." How could he tell when the time was right? Soros has said that he would have an instinctive physical reaction about when to buy and sell, making his strategy a difficult model to emulate.

When he fully retired in 2000, he had spent almost 20 years speculating with billions of other people's money, making him - and them - very wealthy through his highly successful Quantum Fund. He made some mistakes along the way, but his net results made him one of the world's wealthiest investors in history.

Note: The list is random and not ranked as per greatness or anything.