Arrow Coated Products : Update

Hi friends,
Lately receiving lot of queries regarding Arrow about its valuation and new agreements.

The major development and rationale may be as

1. Increased borrowing limits : Obliviously to increase the quantum of business

2. Listing in NSE : To get better visibility in investor community

3. Agreement with Careli

Initially struggled to get details (as any companies announcement, I usually try to cross check and verify the facts Vs blah blah), main reason as the company having Spian origin, one with the website created with Spanish language. 

And once I was able to get in to some level of details, it was mind blogging.

You can get details from 

http://www.careli.es/

And much more details from their FB page

 LINK : https://www.facebook.com/floppcareli

[Use translate option by using right click to read in English]

These information gives a view that the company is in existence for long, with a very good portfolio of products.

PS: But still unable to get the Market Cap related info of Careli. Once I get those info, I will update as a separate post.

Factor 2: Business opportunity, scalability and sustainability

Out of the six factors I mentioned earlier, this is the most difficult part to identify and predict properly. i.e. identifying an upcoming sunrise sectors at reasonably early stage. Other five factors can be analyzed either quantitatively or qualitatively with much better precision, with the past available data. Where this second factor requires little imagination and bit luck too.

Inorder to succeed in identifying gems based on this criteria, you requires to have the required imagination skills to forecast 10 or 20 years future outcomes and trends.

A simple example: If you were able to identify a revolutionary change in mobile technology and invested in leaders like Airtel a decade back, it might have turned a 20 Bagger by this time, still with lot of gunpowder left in it!

Another classy example I would like to pen is about two companies from the same sector with legacy products, where one turned to be a huge huge multibagger while the other is still drowning in mid sea!

HINDUSTAN MOTORS  Vs  EICHER MOTORS

Or

Amby		Vs		Bullet !!

These two initial UKproducts, later turned to be Indian, suffered a lot in the past to survive and both products only changed little during its life span. One is out of production and the other is still the favorites of the youth!

The success in investment / share market also will depend on your prediction analyzing who will win the race?!

A decade back (say in 2001), if you have invested Rs. 10 thousand, both will speak differently now, similar to the demand of the products!

Company	Inv Year	Avg Share Price	CMP	Inv amount	Present Value
Hindustan Motors	2001	Rs 4/-	Rs 8/-	10,000/-	20,000/-
Eicher Motors	2001	Rs 24/-	Rs 14000/-	10,000/-	5,800,000/- (Rs 58 Lakh)

I just gave this example to show that how much difficult is to identify winners from the total pack.

Here in this case both companies having products with outdated technology and both products were never changed much in its life time. Still one became the favorite of youth due to its own reasons and at the mean time, the other one parked in our minds with good old memories!

Similarly, in the whole world sectors like Motors, Pharma, Computer , IT excelled in the past. NEXT BIG THEME MAY BE ROBOTICS!!!

Have enough imagination! (Nothing more can be said about this factor)

Happy investing!!

Arrow Coated Products: Update

Hi,

This is the update I received from the Arrow Coated Products Meltz Team.

I think its very important development going forward.

[Information from the Meltz Team Facebook page : LINK HERE]

Earlier Posting in Arrow Coated Products

1. Last result update 

2. Arrow-coated-product-update-based-on-shp.html

3. Arrow-coated-products-update-based-on-ar.html

4. SIP - Sep -2014 

5. SIP - July - 2014

6. SIP - Jun -2014

Happy investing All!

A very interesting article

Below lines are taken from the article published in thehindubusinessline.com, and sharing with you since it’s covering an analysis about small cap stocks between 2004 to present.

Courtesy: The Hindu BusinessLine

Investing in small-cap stocks could be full of thrills but it is fraught with risks too

For Indian investors, small is beautiful. The BSE Small Cap index has delivered 118 per cent return since last September, even as its large-cap counterpart, the Sensex, panted way behind, with a 59 per cent return. That is not all. Investors in stocks such as Symphony, Greenply and Ashoka Buildcon have seen their holdings appreciate manifold since the beginning of 2014.

But does that mean you should rush to buy these stocks? No. Investing in Indian small-cap stocks is a high-risk game. While you have a small probability of making mind-boggling returns, the chances of making losses are much higher. Lack of sufficient information, poor corporate governance and very thin liquidity are some reasons why these are best avoided.

But if you are one of those who revel in adrenaline-pumping activities such as bungee jumping, you might want to put some of your money into these stocks; just for thrills.

Small-caps over the long term

There is a popular misconception that investments in small-cap stocks invariably result in losses over the long term. But that is far from the truth. A BusinessLine analysis of the returns of small-, mid- and large-cap stocks between 2004 and now shows that it is the outliers that give smaller stocks notoriety. For, a small portion of small-cap stocks have delivered mind-boggling returns that large- and mid-caps can never dream of matching. At the same time, the proportion of stocks that have delivered negative returns is also larger in smaller companies.

We considered the returns of 1,648 stocks whose market capitalisation was less than ₹200 crore on April 1, 2004. A chunk of these stocks — or 44 per cent of the universe — recorded a price increase between 1 and 10 times. About 17 per cent gained between 10 and 100 times. The proportion of stocks gaining more than 100 times was miniscule at 1.4 per cent. This creamy layer includes stocks such as Symphony (1,680 times returns), TTK Prestige (231 times) and Cera Sanitaryware (180 times).

In comparison, 63 per cent of the large-cap universe chalked up gains between 1 and 10 times in the past decade. There were 93 stocks with market cap greater than ₹2,000 crore towards the beginning of 2004. This is comparable to the mid-range of the small-cap stock performance. But when it comes to stratospheric returns, only 12 per cent of the large-cap stocks could multiply their prices more than 10 times. Again, while the largest gainers among the small-cap lot notched up gains between 100 and 2,000 times, the best performer among the larger stocks was Kotak Mahindra Bank, which gained 28 times in the last 10 years.

So, what is the risk involved? Around 22 per cent of the smaller stocks witnessed price erosion in the past decade. That is, one in every five stocks was a lemon. Large-cap stocks emerged a clear winner, with just 8 per cent of the stocks seeing price erosion.

Higher volatility in smaller stocks

The small-cap index has recorded much sharper rallies and higher declines. For instance, between April and December 2003, the small-cap index rallied 172 per cent while the Sensex gained 97 per cent. In the 2008 crash, the Sensex lost 56 per cent while the BSE Small-cap Index lost 77 per cent. In general, the declines and rallies in the small-cap index are twice the moves in the Sensex.

The complete article may be accessed here: http://www.thehindubusinessline.com/features/investment-world/smallcaps-sizzle-should-youjump-in/article6627318.ece

Waiting for more Clarity

Hi Friends,

I hope all of you might have aware about the new SEBI restrictions by this time.

I, as well as lot of value hunters didn't have a concrete idea about the level of restrictions imposed.

Any how it’s clear that, it's not proper to give a BUY / HOLD / SELL call on any particular stock unless you are a SEBI registered research analyst. So from here onwards I will not be giving any particular call on any stock nor new monthly SIP candidates in the blog (as it indirectly giving a BUY recommendation).

[Till more clarity emerges on the restrictions; or till I register with SEBI] 

The present value of portfolio is 2.52 Lakh (with a total invested corpus of Rs.1.25 Lakh in a span of six month).

My view about new SEBI norms

According to me, the new SEBI rules are having very good objectives and in need of the present situation. There are a lot of firms / people giving different recommendations through TV / websites / blogs, and the sad part is that more than 80 % are having mischievous crooked intentions. I did know few such blogs personally too, but don't want to name it publicly. So, hopefully, these restrictions may have better effects going forward.

MVPP blog will continue in these modified lines :

Personally I think, the learning / or acquiring knowledge is more important than simply following any blog / analyst. Sure, a good blog ( like value pick blog) will help you to reduce your searching, but it should not be the end point. Even if it’s recommended by me or the Great VP, we should be in a position to analyze that picks ourself.

With the new SEBI guidelines, the searching time of an investor will increase and inorder to find a multibagger we may have to turn every stone that's untouched. Of-course it’s a tedious task, but I think it’s more important to hold on our winners well enough is more important than finding new multibaggers in every month.

Greatest Example:

If we take the average number of the total companies invested by total number of years, by the greatest Buffet – Munger pair, it will be just 1 share / year!! So inorder to make a fortune in share market, you don’t have to find too many number of picks, but need to find those winners with a moat, and hold on; and remember - you just need to find only 1 idea per an entire year :)

So from now onwards my concentration will not be any company specific; but towards the basic causes behind a huge multi-multi bagger. Similarly the essential points required to develop the skills to evaluate a company.

The series on 6 Most important factors to consider while searching for a Multibagger and similar postings will be continued.

Happy investing.