Special situation Strategy in equity market

Special situation Strategy in equity market


An event driven strategy of investment is the one that helps an individual investors to identify stocks that may lead to a successful long-term investment. The common terminology used for such technique is called “Special Situation” strategy. Management of the firm may take some corporate actions that will change the fundamental value of the company. Intelligent decisions of such managers could result in uplift of the intrinsic value of the underlying business. As a special situation strategist in equity market, investors should look in for such announcement on regular basis. Here are some of such situations that can be worth following-


De-merger – when businesses are managed individually, it might earn more return than in combined way! In developed markets, they call this as ‘spin-off’
Divestiture of non-core business segment or an asset – this will hive off the loss or low performance. It is better to remove bad apples from the good ones
Buyback, Special dividend or Return of capital – Companies that reduces its ownership ambit or its own capital when their underlying business is growing consistently
Insider buying – When managers of business increases their ownership in it, there may be a change in the fundamental value of the company
Debt pay down – Debt free capital structure is too good for a business. When firm pays down its debt, it can be a good sign for investors



The above list is exhaustive. Investors can also include arbitrage opportunities in M&A if both the entities are public.


Let us check out some of the special situation stocks announced in BSE.


Company Announcement Special Situation
Kriti Industries India Ltd Kriti Industries India Ltd has informed BSE that the Company has received certified true copy of the order of Hon'ble High Court of Madhya Pradesh on January 08, 2010, for approving the Scheme of Arrangement between Kriti Industries (India) Ltd., Kriti Nutrients Ltd. and Kriti Auto & Engineering Plastics Pvt. Ltd. for demerger of solvent division into Kriti Nutrients Ltd. and hiving-off moulding division into Kriti Auto & Engineering Plastics Pvt. Ltd. The appointed date for the same has been fixed as January 01, 2010. Both de-merger and divestiture




FDC Ltd Got shareholders approval for buyback - to commence buyback from Jan 18, 2010. The Company proposes to Buyback upto 86,50,000 Shares ("Maximum Offer Shares") and minimum of 13,00,000 Shares ("Minimum Offer Shares") at a price not exceeding Rs. 65/- per share payable in Cash. Buy back

Investment tips from Insider trading reported yesterday

Investment tips from Insider trading reported yesterday


Today there are couples of stocks that may be interesting for long-term investment.


Aarti Drugs Ltd – where CFO and CEO had increased their stake in the company. CEO had bought 1,00,000 shares when the price was below Rs. 100 against the current price of Rs. 109.30
Cheviot Company Ltd – where Chairman had increased his ownership from 6.34% to 6.5%


Company Name of Acquirer / Seller Transaction Date Buy /Sale No.of Shares Transacted Holding after Transaction
Quantity % Quantity %
Aarti Drugs Ltd Harshit M Savla, CFO 01/12/2008 - 05/02/2009 B 10527 0 182819 1.56
Aarti Drugs Ltd Harshit M Savla, CFO 20/12/2009 B 100000 0 282819 2.34
Aarti Drugs Ltd Jayshree H Shah 16/04/2009 B 5400 69749 0.6
Aarti Drugs Ltd Jayshree H Shah 16/04/2009 B 5400 0 69749 0.6
Aarti Drugs Ltd Jayshree H Shah 20/12/2009 B 52000 121749 0.11
Aarti Drugs Ltd Jayshree H Shah 20/12/2009 B 52000 0 121749 0.11
Aarti Drugs Ltd Prakash M Patil, CEO 8/5/2009 B 5573 0 678170 5.79
Aarti Drugs Ltd Prakash M Patil, CEO 20/12/2009 B 100000 0 778170 6.43
Cheviot Company Ltd Harsh Vardhan Kanoria, Chairman 21/12/2009 B 2625 285931 6.34
Cheviot Company Ltd Harsh Vardhan Kanoria 22/12/2009 B 1031 286962 6.36
Cheviot Company Ltd Harsh Vardhan Kanoria 23/12/2009 B 4617 291579 6.46
Cheviot Company Ltd Harsh Vardhan Kanoria 24/12/2009 B 1370 292949 6.49
Divyashakti Granites Ltd A Anuradha -- B 46323 0.4 465992 4.5
Divyashakti Granites Ltd A Bhavani Prasad -- B 40000 0.4 295900 2.86
Divyashakti Granites Ltd G Ramakrishna -- B 50000 0.5 408100 3.94
Divyashakti Granites Ltd G V Krishan -- B 40000 0.4 411900 3.98
Divyashakti Granites Ltd K Gangadhara Rao -- B 30000 0.3 30010 0.29
Divyashakti Granites Ltd K Raghu -- B 46232 0.5 416482 4.02
Divyashakti Granites Ltd N Bhanu Prasad -- B 64410 0.6 324620 3.14
Divyashakti Granites Ltd N Hari Hara Prasad -- B 44410 0.4 430517 4.16
Divyashakti Granites Ltd N S R C Sekhara Rao -- B 57750 0.6 157760 1.52
Divyashakti Granites Ltd N V Rattaiah -- B 40000 0.4 702790 6.79
Divyashakti Granites Ltd Nallapati Ramachandra Prasad -- B 40000 0.4 83000 0.8
Kotak Mahindra Bank Ltd Dipak Gupta 18/12/2009 S 69 327181 0.09
Kotak Mahindra Bank Ltd Dipak Gupta 21/12/2009 S 2431 324750 0.09
Kotak Mahindra Bank Ltd Rajnish Singh 18/12/2009 S 4109
KRONE Communications Ltd ADC GmbH 18/12/2009 B 100 0
Mahindra & Mahindra Ltd Anupam Puri 22/12/2009 S 16664
Mahindra & Mahindra Ltd Anupam Puri 22/12/2009 S 16664
Piramal Healthcare Ltd Maneesh Nerurkar 29/12/2009 B 12000 0 22550 0
Prime Focus Ltd Neeta Malhotra 22/12/2009 - 29/12/2009 B 26000 138772 1.08
RFL International Ltd Jigan Rasiklal Vora 17/12/2009 S 655275 2.6
Shree Ashtavinayak Cine Vision Ltd Dahlia Traders Pvt. Ltd 22/12/2009 S 214000 0 32795330 31.3
Visesh Infotecnics Ltd Seema Aggarwal 14/12/2009 S 54588
Zenith Infotech Ltd Devita Saraf 19/12/2009 B 40000 0.3 383500 3.02

Source : bseindia.com

Insider trading – a hint for individual investor

Insider trading – a hint for individual investor
Who else knows much better about a public company than its internal stakeholders? They are the one who are better positioned to assess the underlying business of a firm. As an individual investor, we should take a clue in assessing the company’s fair value from the insider’s prospective. The best way is to track these internal stakeholders act of buying and selling the equity shares in the open market. Such transactions are termed as ‘Insider trading’ by SEBI. If such hint had been taken a year back in ‘Satyam Computers’, investors would have saved their capital well in advance. Remember, Mr. Raju’s family was regularly selling off their stake in the name of pledging! What can be a better example than this! This is on the flip side of the whole concept. On the other hand, investors can also take hint when the insiders buying their own company’s stock. Let us look into some of the important concepts of insider trading.
Who is an insider for a company?
According to SEBI guidelines, “insider” means any person who, is or was connected with the company or is deemed to have been connected with the company, and who is reasonably expected to have access to unpublished price sensitive information in respect of securities of company, or who has received or has had access to such unpublished price sensitive information. It also defined ‘connected person’. They are-
• Director of the company
• an officer or an employee of the company or holds a position involving a professional or business relationship between himself and the company and who may reasonably be expected to have an access to unpublished price sensitive information in relation to that company

By the definition of SEBI, ‘insider’ also includes largest shareholder/s who holds substantial ownership (more than 5%) in the company. They include institutional investors and promoters.
When the transactions will be reported?
Any transaction by them has to be reported by the company within 5 days of receipts of such information to the stock exchanges
Source: http://www.sebi.gov.in/acts/act081.pdf
How exactly to track an insider trading for successful investment?
Watch out for promoters, executive managers and largest shareholders trading activities. It is better to ignore small transactions. Also it is advisable to check the history of such insider’s transaction and align the same with the price movement of that particular stock. If he or she is buying when the price is going down, it should give a green signal to investors. However, the investor should not blindly buy at such instance. He should do an elaborate analysis on grounds such as financials, management, business and industry. Once he convinced on these angles, investor can go ahead to invest for a long term. On the contrary, if insiders sell, it should raise a red flag like in the case of Satyam Computers.

he case of Satyam Computers.

Stock/Share Market Knowledge :

Stock/Share Market Knowledge:


1. Give people more than they expect and do it cheerfully.
(Share your knowledge with others; you'll receive multi-fold from others)


2. Marry a man/woman you love to talk to. As you get older, their conversational skills will be as important as any other.

(Be in touch with experts in the field, you'll learn much from them)


3. Don't believe all you hear, don’t spend all you have.

(Don’t believe in what others are saying or doing, invest money wisely)


4. Be engaged at least six months before you get married.

(Understand the market first deeply, only then commit yourself to it)


5. Love deeply and passionately. You might get hurt but it's the only way to live life completely.

(Do what your passion is. If it's stocks, only then does it else look for something else)


6. Talk slowly but think quickly.

(Take quick decisions)


7. Remember that great love and great achievements involve great risk.

(Higher the risk, higher the gains)


8. When you lose, don't lose the lesson.

(Don’t fear about making mistakes but learn from the mistakes)


9. Remember the three R's: Respect for self; Respect for others; and responsibility for all your actions.

(Respect others opinions but take your decisions)



10. When you realize you've made a mistake, take immediate steps to correct it.

(Words say it all. If you have bought a wrong stock and you've realised it, sell it before your losses multiply)
More information about Intraday Tips, Intraday Calls, and Share tips intraday we can get:
http://www.sharetipsexpert.com/