Measuring The Moat

wealthymattersIf a competitor had unlimited resources , how quickly could they duplicate the company’s competitive advantage ?

Investing In Unlisted Shares

wealthymattersIf you’d like to be part of the action and excitement of various start-ups, you can consider investing in unlisted shares. But there are a few challenges to overcome and difficulties to bear up to.

Since these companies are unlisted, very little financial information is available. Also, because there’s no formal platform to trade these shares, the demand-supply situation varies and the price at which deals are struck are a function of the quantity, demand-supply situation and the sentiment prevailing in the secondary markets.

Unlike listed stocks, the unlisted space has few brokers and trades are made through known sources.Often, a broker accumulates small lots of shares from employees who have earned them as ESOPs, or from investors who have bought earlier and are looking for an exit. Once the broker has a sizeable chunk of shares, typically worth more than Rs 1 crore, it’s offered to HNIs.

Unlike listed shares, where a holder can exit through the stock exchange, liquidity is poor in unlisted companies. You would have to look for an IPO or another buyer. Read more of this post

The Grim Side Of Foreign M&As

wealthymattersYes, there is the successful take-over of JLR by Tata Motors, but most of India Inc’s big-ticket overseas acquisitions in the past five to seven years have,eroded wealth. The reasons for this range from high leverage taken to acquire a company , adverse changes in business cycle, or simply , failure to turn around a loss-making unit.

Tata Steel-Corus

Tata Steel acquired Corus, four times its size, for $12.04 billion in 2006. The valuation was more than one and-a half times its initial offer and was paid mainly through debt. Eight years down the line, Corus hasn’t contributed much to Tata Steel’s earnings. The European business was loss-making till FY13 and has not yet shown strong signs of a turn around.

Hindalco­- Novelis

Hindalco acquired Canadian company Novelis for $6 billion in 2007, making the combined entity the world’s largest rolled-aluminium producer. However, the high leverage, resulting from the acquisition and the slowdown in aluminium demand, post acquisition, have led to the company’s stock stagnating at the same level, adding nothing to its value. Read more of this post

The Ten Baggers Of Dalal Street

10 Baggers of Dalal StreetEven the subdued markets of the last five years have produced multibaggers.

Paid Stock Advice

wealtymattersSometimes free stock advice is expensive. In the past, brokerage houses have come up with buy reports to help their larger clients offload a position and many brokerages release technical trading reports only to help generate brokerage income.

Equity investors who believe in buying stocks only after a thorough research and cannot access company managements on their own often seek independent research . Subscribing to fundamental reports makes economic sense if a family has a direct equities portfolio or is keen to build a portfolio of Rs 8-10 lakh at least. Equitymaster provides long-term stock recommendation services based on fundamental research. The service could cost anywhere between Rs2,000 and Rs30,000 annually. In their Hidden Treasure package, they recommend one small-cap multi-bagger every month. Also, they tell you when to book profit or exit the stock. Then there are individual-led firms like Kolkata-based Basant Maheshwari Financial Services, which gives stock ideas and access to archives of 8,000 questions across stocks which have been answered over the last decade. Read more of this post

%d bloggers like this: