Tuesday, October 27, 2009

Kalindee Rail - Kabhi Haa Kabhi Naa

I saw a innocuous piece of corporate announcement on the BSE with respect to Kalindee Rail.

Kalindee Rail Nirman (Engineers) Ltd has informed BSE that the Board of Directors of the Company at its meeting held on October 26, 2009, inter alia, has approved refund of Warrant Application money received from Promoters / Prospective Allottees.

The warrants were issued after getting a go ahead from shareholders in a special EGM held on Sept 08 2009. Just after a month on Oct 15th a announcement is made about a board meeting detailing out refunding of the warrant application money to the promoters.

I didn’t know one can get refund of warrant application money. I love this call option where u get u r option premium back if you choose to.

Gwalior Chemicals - Udpate

I had earlier posted an update about the Gwalior Chemcials opportunity
The dates are finally out for the board meeting to discuss the dividend and /or share buyback. The board meeting is slated for Oct 30th and the agenda is as listed on the BSE site
Gwalior Chemical Industries Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on October 30, 2009, inter alia, to consider the following:
1. To take the decision on distribution of dividend payout and /or share buyback.
2. To consider and take on record the financial results for the quarter ended September, 2009.
3. To change the registered office of the Company within the local limits of the city.

We should hear the final act on this special situation.

Tuesday, October 13, 2009

Flurry of activity - Altered Annual Averages

Last week was a flurry of activity for me in terms of the transactions done in the market. I think I managed to alter my annual averages. I tend to rarely trade so it is invariably 1 or 2 transactions a month on which I would disturb my broker.
Solvay Pharma
I had written earlier on Solvay Pharma after the global announcement by Abbott Labs to takeover the Pharma division of Solvay Pharma globally.

I had entered the stock with the thought of seeing where the market prices the stock post the announcement. The stock has finally settled around the 900-920 mark and I exited the stock with a nominal loss. Will now wait and monitor to look at opportunities where the market could potentially misprice the stock. Afterall there is atleast 6-9 months before the open offer could get announced.

Abbott Labs
I had originally posted on Abbott Labs here.
I had also written about the Solvay acquisition seems to have unintended consequence to the Abbott stock. I exited 50% of my holding in Abbott around the 735 mark. The stock has given me a 36% return versus the Bse sensex which has delivered about 3% return in the same time frame. I haven't factored a additional 3% dividend return and the share buyback that happened along the way.

Suashish Diamonds
I entered and exited Suashish Diamonds on last Friday. One of the few day trades that I would have done. Will write a separate post on this interesting case.

Thursday, October 8, 2009

Gwalior Chemicals Update

I had earlier posted on Gwalior Chemicals at this discussing about the opportunity.


The deal has been consummated with shareholder and regulatory approvals coming through. Except for a amount of 75-100 crores the company has received the balance amount. This amount is currently lying in a escrow account which will be released to the company on achieving some of the deliverables stated in the deal. I at this stage don’t see to much hiccups on this count.

Management had announced a board meeting on the 23rd Sept to discuss the dividend/ share buyback. However the board of directors had to make a unscheduled trip to the US hence the same has got postponed. I last spoke to Sanjeev Pathak the company secretary yesterday and the directors were still not back. According to him the board meeting should ideally happen before the 15th of October.

Saturday, October 3, 2009

Kahi pe Nighaein kahi pe Nishaana - Solvay pharma & Abbott Labs

Solvay Pharma
Last Monday I came across the news article of Abbott Laboratories globally taking over the Pharma division of Solvay. Solvay in India has a listed pharma subsidiary called Solvay Pharma.

Since Monday was a holiday on account of Dussera, I expected the market to not react to the news very fast and digest it completely. The stock had closed the previous trading day at Rs 818. The stock open at 860 and gradually made its way up till and by afternoon I think CNBC had picked up the news and the stock finally closed at 949. I managed to pick stock from 861 to 940 with a average price of Rs 920. Couldn’t move fast in the morning as I got stuck in a meeting but there was clearly a window of opportunity in the morning.

From the way the deal is structured globally there is a open offer that needs to happen according to me from Abbott.

Solvay India released their press release the next day on the deal


Quoting a line from the press release

“ This transaction is expected to closed in the first quarter of 2010, pending the approval by the relevant competition authorities”.

First quarter 2010 sounds so far away that the market lost interest promptly pushed the stock price down and it closed at 909. On Thursday the stock closed at 919 after trading as low as 863 thru the day. Lets see how this plays out.

Now let me come to the more important reason for this post. The law of unintended consequence came into play.

Abbott labs.

I had earlier in my post in May 2008 recommended Abbott at a price of Rs 540 and the Sensex was at 16525. The link is enclosed here. The rationale was a impending buyback at that point at Rs 630. More importantly the parent and the Indian subsidiary had a track record of buybacks and the business throws out steady cash.

The company did a 5% buyback at Rs 630 and announced a Rs 14 per share dividend along the way.

So how did Abbott India react to the news

25/09 – 577 ( Before the news)
29/09 – 679 ( On Tuesday – up 17.5 %)
30/09 – 731
01/10 - 692

The stock is up 20% since the day of announcement. Frankly I don’t see what role Abbott India will have in this acquisition expect for a possible merger at a later date. I am not complaining :-).

Like the title of this post Kahi pe Nighaein kahi pe Nishaana ( Aim somewhere and hit something else)

kahee pe nigaahe, kahee pe nishaanaa

jeene do jaalim banaao naa deewaanaa

Movie - CID ( 1956 )
Singer - Shamshad begum
Music - Op Nayyar
Here’s the Youtube link to it.

Friday, October 2, 2009

Long hiatus

Back after a long hiatus to writing the blog. Part dictated by work part by a vacation in Kerala. I have been there before but it always amazes me the diversity in beauty that India has from the rain shadowed vast expanse of Leh to the thick tropical kind of greenery of Kerala.


IL& FS Investmart
I had written earlier on IL&FS Investmart covering the original hypothesis and the follow up action on the idea.

1) http://investingvalues.blogspot.com/2008/11/dabur-pharma-il-investmart-two-to-tango.html - Nov 2008

2) http://investingvalues.blogspot.com/2009/06/dabur-pharma-il-investmart-update.html - June 2008

3) http://investingvalues.blogspot.com/2009/06/il-investmart-bingo.html - June 2008

I finally exited the stock in the Rs 270 range where it has been hovering for sometime. Along the way the company has now become HSBC Investdirect. The delisting process is on track with shareholder approval been received for the same.

I decided to exit as opposed to wait till the final delisting event as my belief is that there is maybe a further 10% on the table. Looking at deploying the money in other opportunities or sit on cash.

From my original investment at Rs 84, the stock has delivered a absolute return of 221% over a 10 month period. If only I could find one like this every 6 months :-)