Some insiders are selling their shares! - The 5 Minute WrapUp by Equitymaster
Investing in India - 5 Minute WrapUp by Equitymaster
PRINTER FRIENDLY | ARCHIVES

Some insiders are selling their shares! 

A  A  A

In this issue:
» Cases of insiders selling part of their stakes
» Krugman's dire warning for world economy
» The most attractive destination for international retailers
» Takeaways from Indian Hotels' analyst meet
» ...and more!!

00:00
 
There is an old saying that no one's ever gotten broke by booking profits. And it is not just investors that are taking this phrase seriously but the promoters and top management at some of the Indian companies too.

As market value of Indian companies rise from their lows and witness handsome gains, corporate bigwigs are being seen resorting to offloading part of their equity holdings so that the gain in their wealth can be encashed. As per a leading daily, some of the big names involved here include the Tanti family of Suzlon Energy, L&T's Chairman and Managing Director, and a couple of HDFC top management officials.

-------------- An Opportunity You Don't Want to Miss Out On --------------

In a few hours from now -- Equitymaster will release its latest issue of the Hidden Treasure, our small cap recommendation service. The opportunity that we're going to reveal is in the power transmission and distribution sector. This company, which has grown its profits 12x in the last 5 years, is poised to benefit from the boom in infrastructure spending. It could be a multi-bagger in the years to come... you don't want to miss out on this dirt cheap stock. This report is available only to Hidden Treasure subscribers. To know why you should become one too, Read On...

------------------------------------------------------------------------------------------

Although there is nothing wrong in this trend as long as the total number of shares changing hands is small, investors should watch out for companies where the stake being sold is sizeable, especially where the underlying company's financial position is weak or it is going through troubled times. Since no one has a better idea of the developments that are taking place within a company than the top management itself, a large quantum of offloading could indeed be signs of coming trouble.

Cases of promoters selling stakes
Company Name of seller Designation Quantity Total value (Rs m) Value per share (approx.) Current price
Apollo Hospitals Prathap Reddy Chairman 550,000 287 522 490
Suzlon Energy Girish Tanti Promoter 23,500,000 2,045 87 120
Suzlon Energy Rambhaben Ukabhai Promoter 27,500,000 2,393 87 120
Suzlon Energy Nidhi Tanti Promoter 9,000,000 804 89 120
L&T AM Naik CMD 40,000 61 1,525 1,520
L&T KV Rangaswami Director 10,000 14 1,400 1,520
HDFC Deepak Parekh Chairman 25,000 60 2,400 2,268
HDFC Renu Karnad ED 20,000 48 2,400 2,268
Kotak Mah. Bank Anuradha Mahindra Promoter 75,359 52 690 669
Table Source: Economic Times

00:48
 
Before the onset of the credit crisis when derivatives and other such arcane and new age instruments flooded the financial system, there was no shortage of criticism for the Reserve Bank of India (RBI) for being a conservative lot. Now, that very same conservatism is being lauded both globally and in India.

Rs 100 invested is now worth...
Source: Trend
When asked for his advice to the banking sector recently, Mr. K.V. Kamath, chairman of ICICI Bank recently said in an interview, "I will tell them (banking companies) to continue to be conservative." Interestingly, ICICI Bank itself has been quite aggressive in its lending in the past and has also had to pay the price for it (in terms of rising NPAs). The bank was also at the forefront in terms of losses arising from exposure to US subprime assets. Maybe, Mr. Kamath's current conservatism comes on the back of these bad experiences for the bank under his charge.

Anyways, at the end of the day, it was truly a mark of foresight and wisdom on the part of the RBI who saw the need to be conservative and implemented that attitude in the form of right policies when it was needed the most.

01:32
 
The US administration wants to go very slow when it comes to withdrawing the economic stimulus. This has been clarified by the country's Treasury Secretary Timothy Geithner, who has said, "It is too early to shift toward policy restraint. Economic and financial recovery, however, will be stronger and more sustainable if we make clear today how we get back to fiscal sustainability when the storm has fully passed."

As you are aware, the US is under tremendous pressure from its burgeoning fiscal deficit (excess of government spending over its income) which contains the seeds of future hyper-inflation if the house in not brought to order. And then, with Asian countries like China and India that have been financing the US deficit for so long, now voicing their concerns on its bloated deficit, there is no other way than fiscal restraint for the US government when things show signs of improving.

Till that time, however, Geithner and his men would not tighten their purse strings.

02:09
 
Now, before Geithner even thinks of removing the stimulus from the US economy, he needs to listen to what Paul Krugman has to say. The Economic Nobel prize winner for 2008 has been on the dot in the past in predicting the bubble burst. And his current predictions are even scarier.

In an interview given to the English news daily Guardian, Krugman has warned that what happened to Japan in the 1980s will happen to the whole world now. As he says, "The risk of a full, all-out Great Depression - utter collapse of everything - has receded a lot in the past few months. But this first year of crisis has been far worse than anything that happened in Japan during the last decade, so in some sense we already have much worse than anything the Japanese went through. The risk for long stagnation is really high."

Just as a review, the crisis in Japan in the 1980s was all about excess debt, excess leverage and lack of demand, which was reinforced by the fallout from the asset bubble collapsing. They did not have credit contraction on anything like the US is witnessing now. But even so, zero interest rates were just unable to turn the Japanese economy around. And Krugman expects a similar ill fate for the US economy over the next few years.

And then he says, "I hope I'm wrong but the question you always have to ask is: where do we think that this recovery's going to come from? It's not an easy story to tell."

03:07
 
India is the most attractive destination for international retailers looking to expand in emerging markets. At least this is what the AT Kearney's Global Retail Development Index says. This index ranks 30 developing markets according to market attractiveness, country risk, growth and market saturation.

Two reasons have put us at the pinnacle. First being, lower penetration levels of modern retail. And the second - other nations have moved down as they had a tougher year compared to India. Vietnam, which was number one last year, slid to number six. Poor performance by the other nations has helped us score better!

03:29
 
We recently attended the analyst meet of Indian Hotels, India's largest hospitality company. And if one were to go by the views outlined therein, it's grim from a short term perspective. The company's management expects the Indian hotel industry to witness yet another tough year in FY10. While the effect of terror attacks on tourist inflow has reduced, the global slowdown and lower corporate spends would continue to pinch.

The management has indicated that the industry is likely to see a drop of 10% to 15% YoY in room rates during the current year. This is apart from the pressure that would continue on the occupancy front. Indian Hotels itself has seen occupancy levels drop to 66% in FY09 as compared to 73% in FY08. The company is now looking at rationalising its expansion plans.

03:59
 
Indian markets traded weak today led by losses in stocks from the oil & gas and capital goods sectors. At the time of writing, the BSE-Sensex was down around 360 points (2.4%). The BSE-Midcap and Smallcap indices were also trading weak - down by 2.3% and 2.1% respectively. Among other key Asian markets, while China ended the day with gains, weakness was seen in Hong Kong and Japan. European markets have also opened the week on a dull note.

04:15
 
India and China seem to be at the loggerheads yet again. Just as the moving of Indian troops to the border along China has caused resentment in the Chinese camp, so are the Indians not too enthused about a consignment of fake drugs, which were actually produced in China, being labeled as 'Made in India'.

The State Food and Drug Administration of China is investigating the allegation. Spurious drugs are a menace to the pharmaceutical industry as they are dangerous to health and can eat into sales and profits of companies manufacturing ethical drugs. Besides given that India still has an edge over China in terms of being the partner of choice with both global innovator and generic companies, China will have to pull its act together fast. Any more negative news on the drugs front will only tarnish its image and set its pharmaceutical industry one step back.

04:49  Today's investing mantra
"For some reason, people take their cues from price action rather than from values. What doesn't work is when you start doing things that you don't understand or because they worked last week for somebody else. The dumbest reason in the world to buy a stock is because it's going up." - Warren Buffett
The 5 Minute WrapUp Premium is now Live!
A brand new initiative of Equitymaster, this is the Premium version of our daily e-newsletter The 5 Minute WrapUp.

Join us in this journey to uncover the sensible way of managing money and identifying investment opportunities across various asset classes including Stocks, Gold, Fixed Deposits... that over time can help you realize your life's goals...

Latest EditionGet Access
Recent Articles:
Why NOW Is the WORST Time for Index Investing
August 18, 2017
Buying the index now will hardly help make money in stocks even in ten years.
This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)
August 17, 2017
A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.
This Company Beat the Business World's 'Three Killer Cs'
August 16, 2017
And what it has in common with beating the stock market too.
Let's Hope This Correction Continues
August 14, 2017
Last week's correction is making a number of Super Investor stocks look a lot more attractive...

Equitymaster requests your view! Post a comment on "Some insiders are selling their shares!". Click here!

3 Responses to "Some insiders are selling their shares!"

PANGAJAM

Jun 16, 2009

iTS INDEED NOT CURRENT INFO BUT OF THE DAY IN A VERY VERY NUT SHELL.

PANKAJM

Like 

surajit paul

Jun 16, 2009

pls send investmantra directly.

Like 

Harish

Jun 16, 2009

Thanx for such a nice and valuable information. plz keep updating us with such value additions...

Like 
  
Equitymaster requests your view! Post a comment on "Some insiders are selling their shares!". Click here!

MOST POPULAR | ARCHIVES | TELL YOUR FRIENDS ABOUT THE 5 MINUTE WRAPUP | WRITE TO US

Copyright © Equitymaster Agora Research Private Limited. All rights reserved.

Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement

Disclosure & Disclaimer: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. The Author does not hold any shares in the company/ies discussed in this document. Equitymaster may hold shares in the company/ies discussed in this document under any of its other services.

This document is confidential and is supplied to you for information purposes only. It should not (directly or indirectly) be reproduced, further distributed to any person or published, in whole or in part, for any purpose whatsoever, without the consent of Equitymaster.

This document is not directed to, or intended for display, downloading, printing, reproducing or for distribution to or use by, any person or entity, who is a citizen or resident or located in any locality, state, country or other jurisdiction, where such distribution, publication, reproduction, availability or use would be contrary to law or regulation or what would subject Equitymaster or its affiliates to any registration or licensing requirement within such jurisdiction. If this document is sent or has reached any individual in such country, especially, USA, the same may be ignored.

This document does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Our research recommendations are general in nature and available electronically to all kind of subscribers irrespective of subscribers' investment objectives and financial situation/risk profile. Before acting on any recommendation in this document, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek professional advice. The price and value of the securities referred to in this material and the income from them may go down as well as up, and subscribers may realize losses on any investments. Past performance is not a guide for future performance, future returns are not guaranteed and a loss of original capital may occur. Information herein is believed to be reliable but Equitymaster and its affiliates do not warrant its completeness or accuracy. The views/opinions expressed are our current opinions as of the date appearing in the material and may be subject to change from time to time without notice. This document should not be construed as an offer to sell or solicitation of an offer to buy any security or asset in any jurisdiction. Equitymaster and its affiliates, its directors, analyst and employees will not be responsible for any loss or liability incurred to any person as a consequence of his or any other person on his behalf taking any decisions based on this document.

As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407