Derivatives Strategies

Stanley Druckenmiller warns of an Endgame in Equities ~ He’s into Gold

Leave a Comment / Classic Quotations, Controversies, Corporate Governance, Derivatives Strategies, Foreign Institutional Investors, Global Economic Crisis, Global Geo Political Crisis, Gold and Silver, Inspiring and Motivating, Investing Approaches, Investing Themes, Investor Gurus, INVESTOR MISTAKES, Reflections, STOCKS, VALUATION / By Gaurav Parikh

Stanley Druckenmiller warns of an Endgame in Equities ~ He’s into Gold

He makes out quite a compelling case for an endgame in Equities with this address earlier this month at the celebrated Annual Sohn Investor Conference of Hedge Fund Managers

http://www.zerohedge.com/news/2016-05-07/stan-druckenmiller-endgame-his-full-apocalyptic-presentation

He’s a self made Billionaire famous largely for the US $ One Billion Gains made in quick time in 1992 when he was with George Soros & they shorted the Pound

His own Fund Duquesne gave reportedly average returns of 30% from 1986 to 2010 when he converted it into a Family Office as he feared he could not continue giving good returns

He’s greatly nervous about the financial leveraging that continues in US & China & has been critical of the US Fed & it’s Governors for over a decade now

“The Fed has borrowed more from future consumption than ever before…..While policymakers have no end game, markets do.”

He supports his nervousness with compelling statistics

The US Total Credit Market Debt as a % of GDP is 350%
The Net Debt vs Operating Cash Flow shows a current 5 year divergence like never before post World War II
The above Indicating that Corporate Debt was not used productively for R & D & Capex but rather for BuyBacks & M & A

He is nervous about China & Japan both

Worth Noting his Views

L & T Finance Holdings recovers to Rs 70 & up 44% from Low inside Two Months

Leave a Comment / Derivatives Strategies, Financing, Foreign Institutional Investors, Holding Companies, Infrastructure, Inspiring and Motivating, Interesting News Sightings, Investing Approaches, Investing Themes, IPOs, Reflections, SEBI, Sectors, STOCKS, VALUATION / By Gaurav Parikh

L & T Finance Holdings recovers to Rs 70 & up 44% from Low of Rs 48.30 on February 12,2016….that’s inside Two Months…it also trades in the F & O Segment

It opened 2016 at Rs 65 when Sensex levels were at 27500 + and closed January 2016 at Rs 58 only to drop sharply below Rs 50 to Rs 48.30 on February 12,2016 and in fact closed February 2016 at Rs 52

Today it’s up to Rs 70 on a day when RBI has dropped Repo Rate to 6.50% ~ cut of 0.25% as expected by the markets & therefore priced in earlier.The Sensex post Noon & announcement of repo rate cut has corrected over 330 points and is below 25100 currently but L & T Finance is up 7.4% to Rs 70 !

Have always had a soft corner for L & T Group even when they’re in soft times & in midst of controversies like just two years ago in mid March 2014 when it was introduced for trading in the F & O Segment in mid month just when parent Larsen & Toubro offered a stake through OFS on the Stock Exchange Window at a Floor Price of just Rs 70 on SEBI allowing this route even though they had sold shares in the prior six months.The F & O trading pattern a day or two before showed insiders ( who must have known lower floor price before hand) short selling at Rs 85 levels & SEBI investigation revealed parties who had never before ever done F & O having indulged in it to make several Crores of Profit

Had been disappointed with L & T Finance Holding’s inability to leverage strongly on the parent L & T Brand in their Finance Foray….This Listed Company should have been over Rs 200 by now inside 5 years after it’s IPO at Rs 52 in mid 2011….Had recommended it strongly in 2011 & saw it’s price move smartly to Rs 95+ Highs in 2012 & 2013 only to slide back….then had recommended exit as was not enamored with top management who always wore a bored & disinterested look at analyst meets

Then came in Bain Capital in September 2015 to stir the shareholding in the company by picking a preferential post issue stake of 5.27% through an aggregate of 95.66 m shares & warrants ( to be exercised from six to eighteen months from allotment) @ Rs 74.This would infuse over Rs 700 crs into the Company.It also created another Rs 600 cr exposure through a 4.95 % post issue stake by buying 85.2 m shares from parent Larsen & Toubro in market deals at @ Rs 70…the Sensex at the time was @ 26200 levels with the Share Price of L & T Finance Holdings in the Rs 67 to Rs 70 range read more

Sensex disappoints in FY 16 as many of the 30 constituents lose big value

Leave a Comment / Automobiles, Banking, Derivatives Strategies, Engineering, Financing, FMCG, Foreign Institutional Investors, Global Economic Crisis, Global Geo Political Crisis, Hydrocarbons, Information Technology, Infrastructure, Inspiring and Motivating, Interesting News Sightings, Investing Approaches, Investing Themes, INVESTOR MISTAKES, Oil & Gas Exploration, Pharmaceuticals, Politics~India, Ports, Power, Refining & Petrochemicals, Reflections, Retail, Sectors, Sensex, Steel, STOCKS, Technology, Telecom, VALUATION / By Gaurav Parikh

FY 16 has been a mixed year for Stocks with Markets on a downward drift with Sensex closing 9.4% lower at 25341

Sensex disappoints in FY 16 as many of the 30 constituents lose big value

Interesting & Heartening to it’s Shareholders ,Reliance has been the biggest constituent gainer at @ 27% while at the other end BHEL has lost half it’s value at 51% ! ~ another 11 companies have lost between @ 19% to 30 % values

Domestic Concerns revolved around second consecutive failure of monsoon in 2015 & slow pace of Reforms & Corporate Earnings Lethargy with growth in single digits despite boasts of GDP Growth of over 7% and lower Inflation and Oil Price falling 40%

Global Concerns revolved around China’s Growth slowing down considerably & It’s Stock Markets losing a lot of it’s froth in panic falls, continuing recession in Europe & expectations of the US Fed raising rate

Consequently FPI Inflows which were a record US $ 17 b in FY 2015, reversed to outflows of US 2.1 b in FY 16.These outflows would have been higher if last month March 2016 had not seen a reversal back to FPI Inflows of US $ 3.2 b

In the first three months of this Calendar Year 2016 , January & February 2016 witnessed significant outflows of US 1.67 b & US $0.8 b respectively that dropped Sensex to 23000 levels.On the back of many countries like Japan,Switzerland and Sweden embarking on Negative Interest Rate Policy,the US Fed send out dovish signals and has delayed Rate hikes.This saw FPI Equity Inflows smartly cross US $ 3 b in March 2016 getting them back into the Green in 2016 & revive the Sensex back up @ 10% to 25500 levels or else FY 16 would have seen a Sensex drop of nearly 5000 points & @ 18%,double than what it actually did in the end

Here are some FY 16 Trend observations :

Sensex closed down 9.4%.It was down @ 18 % just around a month ago but smartly pulled back on record US $ 3b FPI Inflows in March 2016

Of the 30 Sensex Constituents,amusingly after a seven year itch perhaps 🙂 Reliance is the biggest gainer at 27% taking it’s Market Cap to US $ 49 b,next only to top TCS which despite a flat year retains Top Market Cap of US $ 73b !

Six Scrips,including all weather favourite TCS (Market Cap US $ 73b) have remained flat

Of the Four Banks,only HDFC Bank stays in the Green just about,the rest have lost lot of value from one third to one fifth

India Growth Proxy Larsen & Toubro has lost 26% Value

Four Pharma Majors have also dropped significantly from 13% to 28%

Three IT Bellweathers saw Wipro down 10%,Infy up 10% and TCS in between remaining flat

Of the Five Auto Majors,the two 2-wheelers are both in the green,two ,Maruti & M & M are flat while Tata Motors has lost 30% value

Three eternal FMCG Favorites,ITC,Asian Paints & HUL have held up

After a Steel Sector Battering past few years,Tata Steel is now catching it’s breath

All Five Non Bank PSUs continue to flounder ~ BHEL has lost half it’s Value follwed by ONGC down 30% ,Coal India down 19%,NTPC down 13% & Gail down 8%

Housing Finance Leader HDFC too has taken a beating of @ 16%

Controversial Adani Group’s Adani Ports is down 20%

Telecom Leader Bharti Airtel is down 11% despite getting a 4G breather as Reliance’s Jio ,expected to be a sector disruptive force,launch continues to be delayed but should be fully operative by FY 17 year end

IDBI Bank @ Rs 68 ~ Will Govt really let go?

Leave a Comment / Banking, Controversies, Corporate Governance, Derivatives Strategies, Economy, Inspiring and Motivating, Interesting News Sightings, Investing Approaches, Investing Themes, INVESTOR MISTAKES, IPOs, Reflections, Sectors, STOCKS, Union Budget 2016/17, VALUATION / By Gaurav Parikh

IDBI Bank @ Rs 68 ~ Will Govt really let go?

In 1995 IDBI the DFI came out with an IPO at Rs 130.I had given it the notorious sobriquet ‘Instant Death By Investment !’ as the Pricing was way to High.The IPO was bailed out by UTI at the time in a quid quo pro really as then IDBI subscribed to Unit 64 at the high purchase price which was a scam in itself as it was 60% higher than the actual Unit 64 NAV which hovered around par of Rs 10 !

Then in 2004 IDBI the DFI merged with IDBI Bank and in 2010 I had recommended it at Rs 130 in 2010 for several reasons.It did climb past Rs 200 the same year but then disappointed and started it’s downward slide as NPA Demons begin surfacing big time.

Last Month in the second week of February these NPA Demons caused the Share Price to drop below Rs 50

On February 29,2016 our FM made this specific budget phraseology for IDBI :

“The process of transformation of IDBI Bank has already started. Government will take it forward and also consider the option of reducing its stake to below 50 per cent”

It was a no brainer for the Share Price to begin rising the same day from Rs 58 levels to cross Rs 60

It’s now moved up @ Rs 68

Here’s the Share Price Trend of IDBI Bank from 2004 to 2016 (in Rs)

Year	Open	High	Low	Close
Year	Open	High	Low	Close
2004	62.90	115.00	29.25	109.80
2005	110.95	130.95	76.30	97.15
2006	98.15	110.00	48.50	76.30
2007	76.80	181.00	66.50	165.30
2008	166.50	180.30	53.00	67.65
2009	68.00	140.00	39.75	127.45
2010	128.00	202.25	105.85	164.75
2011	165.75	168.30	77.40	77.80
2012	78.30	121.50	77.15	111.40
2013	112.10	118.20	52.30	66.45
2014	66.85	116.50	52.95	73.15
2015	73.25	95.70	52.45	87.80
2016	90.80	91.15	47.40	68.85

The Book Value of IDBI Bank is over Rs 110 giving the relative Valuation of 0.6….that’s of course one accepts current audited GPA levels of Rs 19615 crs ,that’s 8.94% of Advances and with a 62.92 % of Provision Coverage

Government owns 80.16% of IDBI Bank and if it is open to bring this down below 50% as proclaimed in the Budget by our FM then it begs the question ~ Will they just bring it down but yet retain Management Control or will IDBI really be up for Privatisation and therefore up for Sale ! ?

Quickly the IDBI Employees have voiced their displeasure and threatened to go on strike in the crucial last week of this month of March 2016 which closes out FY 16

Why would the IDBI Employees resist Privatisation or Government diluting it’s stake below 50!?

Seriously ask yourself this ! I reflected and immediately came up two big reasons in my view :

Insecurity of Jobs ~ This is understandable as Employees have huge job security under the Government ~ Bank can Hire but not Fire ~ at best Government can try VRS as they’ve been doing over the years in PSU Banks ~ Connect this with how bloated Government Enterprises really are on workforce be it the Railways or Coal India
Accountability & Transparency in Operations ~ This would open a Pandora’s Box in the Bank for all the NPAs & who really is responsible in the Bank to have advanced Loans that have turned Bad.Of the over Rs 2 lakh crores advances ,the Bank reportedly has an exposure of Rs 7000 crs to the JaiPrakash Group,Rs 15000 crs to the Essar Group and @ Rs 925 crs to Kingfisher Airlines.In fact the ED is investigating Vijay Mallya & his Kingfisher Airlines for Siphoning off @ Rs 300 crs Funds from the Rs 900+ crs IDBI Loan

So will our Government be influenced by the IDBI Employees opposition & not go ahead with it’s plans to sell it’s stake in IDBI Bank to bring it below 50% ?…the Budget already shows FY 17 Disinvestment Target of Rs 36000 crs + Precise Strategic Disinvestment of Rs 20500 crs.This would include IDBI Bank Stake Sale planned read more

Indiabulls Housing Finance & Reliance Communications sinking on Bourses !

Leave a Comment / ADAG Companies, Blogs, Controversies, Corporate Governance, Derivatives Strategies, Financing, Foreign Institutional Investors, Insider Trading, Interesting News Sightings, INVESTOR MISTAKES, Reflections, Sectors, Sensex, STOCKS, Telecom, VALUATION, When the Heart Explodes through the helpless Mind / By Gaurav Parikh

Post Bihar Elections Results observe the rapid decline in share prices of Indiabulls Housing Finance & Reliance Communications!

Both are sinking on the Bourses by 15% + & 10% respectively today ….far more than Sensex drop of 1% to 25600 levels !…and both are traded in F & O Segments too !

Indiabulls Housing Finance down 15% + this morning !

Indiabulls Housing Finance had recorded a high of Rs 820 on BSE on August 10,2015 and was available at even Rs 750 levels end October 2015,just a fortnight ago!.Last few days it has rapidly sunk and today the intensity was a worrying over 15% to sub Rs 600 levels this morning

This is just a day after it announced it was acquiring 39.76 % stake for US $ 100 m in the UK Bank OakNorth as was announced also by the PM in his address to Businessmen in UK yesterday while on a three day UK Trip.Interestingly this acquisition was guided by the outspoken and blunt Dr K C Chakrabarty who is on the Board of Indiabulls Housing Finance and who retired in 2014 as Dy RBI Governor…I had blogged on him then when he was blasting the banking rot !…See the link below :

Why Now? ~RBI Dy Governor K C Chakrabarty speaks his Mind on the Banking Rot and seeks to retire a few months early !

Saturday, March 22nd, 2014

Recently in September 2015 the Company had also raised Rs 3997 crs in a QIP at Rs 702 that took it’s networth past Rs 10000+ crs.It has just announced a third interim dividend for FY 16 on it’s FV Rs 2 Share

BSE shows an average Two Week Daily Volume of just 49000 shares .But today there’s mean abnormal selling at just past noon the Volume is 8.6 lakh shares already !

What’s happening ! ? Anybody knows !?

Incidentally the Chairman Sameer Gehlaut too is picking up a 10% stake in the UK Bank in his personal capacity

RCom ringing alarm bells on the bourses

Reliance Communication recorded a day’s low of Rs 63.75 down over 10% this morning and is trying to recover from there.Just last week it was Rs 82 !….having surged from Rs 50 levels end August 2015….down by 20% from Rs 80+ levels inside days !

Average Two Week Daily Volume is 16 lakhs but it’s approaching 30 lakhs already on BSE as we approach 12.30 pm!

Anybody can explain !?

Whatever be the reason ! and there has to be !,such Volatility in such F & O Segment Scrips is unnerving for Speculators,Traders & Investors et all with the exception of Insiders !

And Both were positioned well,despite Corporate Governance Issues,to move further ahead on favourable fundamental developments and on current valuations !…and I did discuss them at my recent NSE Workshop on October 31,2015 highlighting the Corporate Governance Risks though ! read more

Value Protects in Inefficient & Wildly Swinging Scary Stock Markets

1 Comment / Automobiles, Controversies, Corporate Governance, Derivatives Strategies, Entertainment, Financing, Foreign Institutional Investors, Information Technology, Infrastructure, Insider Trading, Inspiring and Motivating, Interesting News Sightings, Investing Approaches, INVESTOR MISTAKES, Nifty, Real Estate, Reflections, Sectors, Sensex, STOCKS, Two Wheeler Auto Ancilliaries, When the Heart Explodes through the helpless Mind / By Gaurav Parikh

Value will Protect in a Wildly Swinging Market !

How Terribly Inefficient our Stock Markets are !

The Share Price Swings in Small & Mid Caps can be equally exhilarating and devastating !…depends !

And all this happens when the Sensex and Nifty move in a very narrow range !

Down ! Down ! Down!

Look at Amtek Auto’s Crash yesterday and continuing today !…all because the Exchanges announced that it will no longer be traded in the F & O Segment

It was Rs 141.50 on August 17,2015.Yesterday August 19,2015 it crashed by nearly 40% and Rs 50 to hit a low of Rs 78 before closing at Rs 89 !

And this morning August 20,2015 it crashed another 40% to a low of Rs 50.70 before now recovering to Rs 67 levels !

So the fall in three days from a High of Rs 141.50 to a low of Rs 50.70 is 64% erosion of market cap from Rs 3100 crs to Rs 1100 crs in just one big Breath ! with High Volumes but low Delivery %….SCARY !

And this is a Company where the Promoters Dhams & Their Companies own 48.98%,FPIs like Goldman Sachs & Macquarie hold 18.83%,Domestic Institutions like LIC hold 16.47% as on June 30,2015.

There were over 46000 shareholders on this date.Spare a thought for them !…and for those who were long in F & O !

…and Spare a Curse for those Broking Houses and FPIs who recommended this Scrip !

Did not all know that the Group is struggling with over Rs 25000 crs in debt !….Wise after the Event !

Date	Open	High	Low	Close	WAP	No. of Shares	No. of Trades	Total Turnover	% Deli. Qty to Traded Qty
Date	Open	High	Low	Close	WAP	No. of Shares	No. of Trades	Total Turnover	% Deli. Qty to Traded Qty
17/08/15	135.00	141.50	127.55	133.10	133.54	11,27,928	15,415	15,06,28,023	17.63
18/08/15	133.25	134.25	127.40	128.55	129.54	5,32,507	5,649	6,89,83,199	23.42
19/08/15	126.90	126.90	78.00	89.00	100.86	35,47,065	26,846	35,77,46,778	36.40

Look at Stampede Capital !

Rs 650 two days ago after an all time high of Rs 800 on August 6,2015 and down on two consecutive lower circuits of 20% yesterday at Rs 494 and even today to Rs 406 on BSE !….CRAZY !…and SCARY!….just over 2700 shareholders,one being Superstar Amitabh Bacchan (entered a year and a half ago picking up One Cr shares at Rs 88 & similar at Rs 110 levels), at June 30,2015 in what is clearly a highly controlled scrip

Look at Ansal Buildwell ! Big Up & Down Swings in three days !

Clearly Insider trading Involved or can the long positions be defended as aggressive risk taking based in favourable anticipation of a Supreme Court Judgement that was announced yesterday on the Ansal Brothers for the Uphaar Cinema Hall Tragedy that took 59 lives 18 years ago in a devastating Fire !

On August 17,2015 the Share Price was Rs 123.On August 18,2015,just a day before Supreme Court Order the Price flared to Rs 148.30.Yesterday it closed up on upper circuit at Rs 163.10 ! as Supreme Court announced merely a Fine of Rs 60 crores on the Brothers and no Jail Sentence !….and today it’s on lower circuit at Rs 146.80 nearing noon !…and the rise was being justified as Market Cap just @ Rs 100 crs and land bank value worth Rs 10000 crs ! read more

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