Vakrangee Software Pump and Dump – Lic buys 6.45% stake in last 1 year

As of yesterday Vakrangee is almost a 3800 cr market cap company quoting at 35 multiple.
Given the super growth in of 40 % in earnings over 10 years and 50% sales growth definitely the rise cannot be totally uncalled for.

In terms of market cap it is in the top 10 IT companies in India which is a kind of surprise. Only behind Mphasis and Tech Mahindra.
Whereas it is much bigger than hexaware , persistent , mindtree , financial tech.

The only concern with the stock has been that after such huge earnings and price growth  the stock has corrected sharply in 2000 and 2007 where it lost 80-90% from peak.

Missed the stock in 2006-2007 because could not understand felt better in 2008 seeing it fall. Same thing happened when i looked at it in 2010 – ( stock is up 10 times ). Maybe this time its different.

But can this time be different. We have LIC which has taken  6.45 % stake ) , Promoters have increased stake as well.

The only concern is why is LIC increasing stake quarter on quarter for the last 3-4 quarters and is now taken it to 6.45% stake which is a decent holding.

Today the stock is down 15% can it be the start of the dump. Will need to recheck on the fundamentals but previous drops in 2000/2001 and 2007 makes this a risky bet. Earnings growth and decent delivery volumes do not give much doubt but the steady rise in such tough market times shows control.

Got to be careful if you are holding this one.

Disclosure: No Holdings or vested interests in the above stock.

LIC runs a scam – Stock 2 – Zylog Systems

This is yet another company which was wanting to raise funds and could not and finally ended up in a big mess with promoters stake reducing.

Surprisingly LIC took stake quarters before the big fall started.

Lets look at the shareholding pattern change.

Some of the earlier holders in the stock were GIC ( which has been trading in zylog ) , UTI – Ascent India Fund and some marquee names of the markets like Sundar Iyer, Sharad Shah.

In March 2012 we saw the first major institutional fund – Max New York Life to be buying a 2.7 lakh shares or around 1.7%  and the stock saw a huge rally in that quarter.

 Then LIC bought the 2.3% stock or around 3.8 lakh shares. This was the highest the stock made.

 Further in the next quarter September 2012 LIC added more stake and made it to 3.22% or around 10.6 lakh shares. This is still a small investment for a large size of LIC of India.

 The next quarter December 2012 saw the stake going to 4.13% stake and we dont really know whether the stock was bought at 300 rs or at 60 rs. Yes the stock fell from 300 to 60 with promoter holding falling in a big way and margin selling.

LIC and GIC stick around with UTI reducing stake , marquee names selling out, Promoters margin selling done.

As of March 2013 LIC continues to hold stake and UTI continues to reduce stake

So yet another stock which goes from 300-320 to 15 rupees almost a drop of 95-99  %.
Surprisingly it seems the stock was waiting for LIC to finish its buying before falling all the way to the dumps.

Was it another case of a scam by LIC or a genuine company which went down the drain. Fundamentally the cash flow was always a concern with huge receivables.

All such bad companies fall only after LIC gets in fully with 5% stake There is no need to comment on why and what went behind the curtains for the stock but i get a new definition for LIC = LAST IN CORPORATION.

Although the company has made thousands of crores through the investments in large cap and such shady small deals do not make any dent into the balance sheet of LIC of India but the credibility lended by the name to such companies traps some retail investors. So no impact on the markets or LIC book . Like many investors suggest that you can invest max of 2% of your portfolio into penny stocks even LIC seems to be doing the same

Recent buying in Flexittuff International by LIC for around 4-5% stake also looks suspect though the stock has not fallen.

LIC, GIC, IFCI – A scam stake buy – Stock 1 – Kiri Industries ( Kiri Dyes )

In the last few posts have been mentioning about how LIC has been systematically been investing in some of the midcap companies which have no credentials and have led to huge losses.

This is the last post on questionable investments in Responsive Inds and Rainbow Papers

In a little older post have mentioned about how LIC had bought into Giitanjali Gems and Core Education before the big drop.

Now will be posting about some of LIC investments one buy one.

KIRI Industries

The company came out with an IPO at 150 rs which according to Crisil was graded as 2/5.

After dropping to 77-80 after the IPO the stock saw a rally to a high of 820 rupees. The stock is now avaliable at 5 rs.

Lets look at how LIC and even GIC,IFCI took stake in such a company with low credentials at higher levels.

In December 2009 shareholding – GIC was the first institutional investor to buy a 1% stake in the company.

In March 2010 GIC increased stake to 1.82%

 Then comes the big quarter of dumping to institutional investors – IFCI, GMO Emerging Market Fund, DSP Blackrock Midcap Fund, Sundaram Mutual Fund.

The promoter stake got reduced to 58% from 73% . Lot of market-men were also supposed to be part of the deal. This was the QIP issue brought by sole banker – First Global – aka Shankar Sharmas company at 597 rs.
They also come out with a report giving a target price of 1000 for the stock -

MARKET EYE-Kiri up, First Global sets 1000 rupees target

In the next 2 quarters DSP Blackrock was the first to exit with small losses and then Sundaram Midcap also got out. Finally even GMO and promoters sold.

The only ones holding the stake are now IFCI, LIC and GIC. Promoters have reduced stake to 27% and all the Cresta Fund, Mavi Investment fund , Well Prospering Limited and other operator circles are out.

This is the chart of the stock and the way it was propped up and placed to Institutional Investors.

 The concern is not the wrong investments by LIC, GIC and IFCI. Investors and institutions make mistake but they rectify it. But when everyone was getting out of this sinking ship why was IFCI, GIC and LIC still holding on to the stock. The stock is now down 99%

In absolute terms the investment is very small for LIC, GIC and IFCI because a 2 lakh shares is just 10 crores. LIC invests around 40k crore + every year so these investments seem to be small. Even the portfolio values of IFCI and GIC are very huge. Supposedly such deals are favorable for fund managers who get a cut on execution.

But if one has to look in the same way if such small numbers add up to 20-50 such stocks and larger sizes will become a very big number in a few thousand crores. For example LIC bought a stake in Welspun from operators like Sanjay Dangi who later came under probe for a value of 268 crores in 2010 is now worth less than 50-60 crores after 3-4 years of investment. The recent Gitanjali number also seems to be same.

Me would putting more such detailed posts on more such scam investments of LIC, GIC and other fund companies if possible in coming few days. Lets hope there is more activism and probe on the same. I have been tweeting about this scam for past few days.

There is another blog with only one post which has mentioned about many stocks in which LIC has invested – http://questionnableinvestments.blogspot.in/2013/07/lic-bigger-question-to-answer.html?m=1



P. S : One of my family member is a LIC agent and i also had belief in the investment process of LIC it makes me angry to see so many of such scam investments. Am not even talking about the PSU investments.
As a market analyst it is not advisable to write such posts but will hope for the best.

BIOCON FRESH BREAK OUT ABOVE 330

BIOCON I HAD WRITTEN ON POST ON JUNE 17
http://trendzofmarket.blogspot.in/2013/07/biocon-heading-to-325-330.html

TO BUY ABOVE 305 FOR TARGET 325- 330  STOCK ACHIEVED THE TARGET NOW I WOULD LIKE TO REVISIT THE STOCK FOR FRESH TARGETS