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    Mispriced Stocks: An Opportunity

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    arif420_999
    The document discusses mispriced stocks and the opportunities they present for investors. It outlines several scenarios where stocks may become mispriced, such as short-term negatives affecting the stock price, negative perceptions of management, lack of interest from markets, and special situations involving mergers, demergers or corporate actions. The document emphasizes focusing on business fundamentals like growth, management quality, and attractive valuations over short-term triggers. It cautions that only a few mispriced stocks will become big winners, so investors must have an independent thinking style and patience to see the business performance realized in stock prices.

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    Mispriced Stocks: An Opportunity

    Uploaded by

    arif420_999
    211 views12 pages
    The document discusses mispriced stocks and the opportunities they present for investors. It outlines several scenarios where stocks may become mispriced, such as short-term negatives affecting the stock price, negative perceptions of management, lack of interest from markets, and special situations involving mergers, demergers or corporate actions. The document emphasizes focusing on business fundamentals like growth, management quality, and attractive valuations over short-term triggers. It cautions that only a few mispriced stocks will become big winners, so investors must have an independent thinking style and patience to see the business performance realized in stock prices.

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    Ashish Chugh

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    The document discusses mispriced stocks and the opportunities they present for investors. It outlines several scenarios where stocks may become mispriced, such as short-term negatives affecting the stock price, negative perceptions of management, lack of interest from markets, and special situations involving mergers, demergers or corporate actions. The document emphasizes focusing on business fundamentals like growth, management quality, and attractive valuations over short-term triggers. It cautions that only a few mispriced stocks will become big winners, so investors must have an independent thinking style and patience to see the business performance realized in stock prices.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    211 views12 pages

    Mispriced Stocks: An Opportunity

    Uploaded by

    arif420_999
    The document discusses mispriced stocks and the opportunities they present for investors. It outlines several scenarios where stocks may become mispriced, such as short-term negatives affecting the stock price, negative perceptions of management, lack of interest from markets, and special situations involving mergers, demergers or corporate actions. The document emphasizes focusing on business fundamentals like growth, management quality, and attractive valuations over short-term triggers. It cautions that only a few mispriced stocks will become big winners, so investors must have an independent thinking style and patience to see the business performance realized in stock prices.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 12

    MISPRICED STOCKS

    AN OPPORTUNITY
    Ashish Chugh
    28/07/2018, Mumbai
    @hiddengemsindia
    Disclaimer/ Disclosure
    • Stocks mentioned in the Course of this
    presentation are only for the purpose of
    illustration for better understanding of the
    context & should not be construed as Buy or Sell
    recommendation.
    • Me or my family may have interest/ investment
    in some of the stocks mentioned
    • I am not a SEBI Registered Investment Analyst
    or Portfolio Manager.
    Smallcap Investing
    The Thought Process
    • Good Business – Potential for Growth – Good
    People – Attractive Valuations
    • Understanding of Risks – Key
    • GROWTH – Inc in Sales & Profitability
    • Multibaggers EVOLVE
    • Greatest Profits come – UGLY DUCKLING
    becomes a SWAN
    • MISPRICED STOCKS – Most people ignore
    probabilities and exaggerate risks
    MISPRICED STOCKS
    Where to Look for them.. ???
    MISPRICED STOCKS – AN OPPORTUNITY
    Scenarios ..

    A. Capital Allocation – Perceived Wrong


    – Natco Pharma – Acquired Drug Stores in US
    – Balaji Amines – Built a Hotel

    B. Short Term Negatives


    – Balaji Amines – Capex taking time to start
    – Capex done – benefits not yet – High Dep. &
    Interest cost, Lower Profits
    MISPRICED STOCKS – AN OPPORTUNITY
    Scenarios ..

    C. Perception of the Management


    – Bombay Dyeing – 40-50/-
    – Mirza International – 20/-
    – Greenply Ind – 80 cr Mcap with 30 Cr PAT

    D. Unnoticed by/ Disinterest of the Markets


    – Atul Auto – 90cr Market Cap
    – Acrysil India – 30-35 cr Market Cap with 5-6cr PAT &
    5% dividend yield
    MISPRICED STOCKS – AN OPPORTUNITY
    Scenarios ..

    E. Survival in Question
    – “Everything doesn’t have to be the next Microsoft – we
    may invest in a Company because the market thinks its
    going to fail, and we don’t”
    – GVK, GMR, Banking Sector, NCLT Companies

    F. Hunting for Triggers – Futile


    – Don’t hunt for Triggers – Focus on Business, Potential,
    Valuations
    – Don’t wait – Triggers can come from anywhere – a
    well known investor entering, story being told to
    market, Research reports etc etc.
    MISPRICED STOCKS – AN OPPORTUNITY
    Scenarios ..

    G. Special Situations – Mergers/ Demergers/


    Corporate Actions
    – Marico Kaya
    – Arvind Smartspaces
    – Praxis Home

    H. Actions of SEBI/ Stock Exchanges


    – Periodic Call Auction/ GSM/ ASM/ Shell Companies
    – PCA - Linc Pens -30/-
    – GSM -Timex -35-40, Accel Frontline -30/-, Lotus
    Chocolate
    – Shell - SQS BFSI, Prakash Industries
    Management Quality

    • “Good Management to Wall Street means


    nothing more than a company with three
    consecutive quarters of rising earnings. Make it
    four quarters and you have a Great
    Management” ~ Ralph Wenger
    Management Quality

    • Extremely Important – more important in


    Microcaps
    • A Misunderstood Subject – An opportunity
    • Perception – could be wrong
    • What to look for beyond Perception
    – No Equity Dilutions
    – Expansions from Internal C/F & nominal Debt
    – Gross Block , Sales , Profits
    – Skin in the Game – High stake
    – Dividend, Buyback, Creeping
    Whats Important ..
    • Not every Stock is a Multibagger – RISKY – Only few turn out
    to be Big Winners
    • Hold – Ride The Gains – Stay the Course
    • Check whether Business (not Stock Price) is Delivering
    • Track Performance/ Potential Growth vis a vis Valuation
    • Have to give time for Business to Deliver – have to hold stock
    without seeing Rise in Stock price
    • Focus on VALUATIONS of Business
    • INDEPENDENT THINKING
    • Age of Information Overload- Give yourself sufficient time for
    THINKING
    • BE FLEXIBLE – Open to Change
    • Don’t Focus on LIQUIDITY – Focus on being right.
    • Pursue an Investment Style that Suits your Temperament

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