Discussion: why promoters take Preferential?
Printed From: The Equity Desk
Category: Market Strategies
Forum Name: Management
Forum Discription: A bad management in a good business is worse then a good management in a bad business. Discuss the techniques to segregate the good management from the bad ones.
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=1432
Printed Date: 28/Jun/2024 at 9:20am
Topic: Discussion: why promoters take Preferential?
Posted By: kulman
Subject: Discussion: why promoters take Preferential?
Date Posted: 08/Dec/2007 at 10:43am
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Excerpts from http://www.thehindubusinessline.com/2007/12/09/stories/2007120951200100.htm - HBL article...here
Any views from TEDdies?
------------- Life can only be understood backwards—but it must be lived forwards |
Replies:
Posted By: basant
Date Posted: 08/Dec/2007 at 11:17am
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Over the last few months I have developed an inbuilt feeling that if a company that I own sees an additional fund raising by promoter participation I would add.
WHile warrant conversion isn't a great idea because the promoter loses just 10% and has the luxory of not buying out the warrants still we should take a look at that.Maybe it is the bull market that is magnifying the whole thing but as investors we need to see that insiders buying is a good indication the mode of such buy outs is always debatable.
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: deveshkayal
Date Posted: 09/Dec/2007 at 3:11pm
What if RNRL promoters buy through preferntial allotment Would you still bet ??  ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: Bangabasi
Date Posted: 22/Mar/2008 at 9:44am
| In light of this can someone explain 1.Why are QIP's at a significantly higher price than CMP? 2.Is a QIP a sign of confidence in the company by the investor? 3.Does a large gap between CMP and QIP price signify a good buy? |
Posted By: kulman
Date Posted: 22/Mar/2008 at 10:34am
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It all depends who the promoters are, the environment (bullish) under which QIP was made, etc etc...
We've seen that even reputed (?) FIIs participating in such placements at expensive valuations & get trapped at the height of euphoria.
Our buying decision need not be based on whether QIP price appears higher than CMP.
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: nitin_jagtap
Date Posted: 22/Mar/2008 at 10:40am
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Yes one latest and classic example ..is Yes Bank ------------- Warm REgards Nitin Jagtap |
Posted By: Vivek Sukhani
Date Posted: 22/Mar/2008 at 10:55am
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Bhai, even you are suffering from obssession with Yes Bank. I think we have far more powerful companies in terms of incredible balance sheet strength which deserve to be discussed far more than this bank.
What do you say.....
Regards,
Vivek
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Posted By: valueman
Date Posted: 22/Mar/2008 at 11:10am
Yes Sir  ------------- To achieve satisfactory investment results is easier than most people realize ; to achieve superior results is harder than it looks . Benjamin Graham. |
Posted By: kulman
Date Posted: 22/Mar/2008 at 11:10am
Indeed a classic example. Weren't markets (including us) just couple of months ago enthused with heavy speculation that the next QIP would be done between Rs. 350~400?
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: vijaygawde
Date Posted: 22/Mar/2008 at 11:17am
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"Though preference shares do not have the voting rights, Preferred shareholders always receive their dividends first and, in the event the company goes bankrupt, preferred shareholders are paid off before common stockholders"
Could this be a reason promoters are opting for the preference shares (particularly those who already have comfortable controlling stake)?
------------- Diversification is protection against ignorance, it makes little sense for those who know what they’re doing. |
Posted By: basant
Date Posted: 22/Mar/2008 at 11:27am
Count me in that list. But at that time what we forgot was Yen going past 100 and some serious knock outs that follows after that ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: bharti
Date Posted: 22/Mar/2008 at 11:37am
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It may be good to look at companies which raised good cash from QIPs or Preferntial whaeter just before the markets reversed directions....if that was to fund capex for say next 1 to two years....these companies are at twin advantage:
a. no need for them to bother about markets down in short term...already funded with very less equity dilutions...
b. their competitors if they missed rasing money at hieght of bull run wiull now have to go for relatively higher dilutions ...also may be able to grow lesser than those who alreadfy funded thyemselves.
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Posted By: anandv
Date Posted: 23/Mar/2008 at 12:06pm
I think PGCIL too did a Placement at around 130 when the stock was at 115.
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Posted By: bharti
Date Posted: 23/Mar/2008 at 4:07pm
| some good examples GMR INFRA, Prime Focus, ENIL( for OOH business..) , PTC etc... |
Posted By: praveen
Date Posted: 19/Jul/2008 at 11:53am
Exactly my thoughts. And probably the reason I added Cords Cable Industries, Precision Pipes, Sunil Hitech at current prices. ------------- The quest for knowledge is a never ending Journey |
Posted By: Azure
Date Posted: 10/Feb/2009 at 7:26pm
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We know Buffet boughts Preferred Stocks in Goldman Sachs worth $5 billion... How does that work??? The company dilutes equity by issuing more shares for Buffet?? ------------- |