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Saturday, August 14, 2010

Promoter buying in GAEL Aug 10,2010

Recent SAST (Substantial Acquisition of Shares and Takeover) disclosures made by promoters of Gujarat Ambuja Exports Limited (GAEL):

10-11 August 2010 promoters of GAEL have purchased 14,500 shares from the open market at an average price of 29.83 per share. I have tried to collect all the SAST information publicly available about promoters buying and here is the list.



Please Note: This list is not a complete list as we are aware promoters have bought close to 400,000 (4 lakh shares Link ) and the sum total of the above list is for 195,899.

Conclusion: Promoters are buying and in fact as early as June 17,2009 promoters had bought at 25.60. From the list I would infer that:
1. Stock is quite fairly distributed and not much is available for promoters to buy.
2. The February to March 2010 downturn has yielded 133,719 shares which is very good for long term investors and promoters
3. Promoter buying will reduce liquidity in the long term helping support higher prices.
4. As we already know good news is not being projected (like the 60Cr Net profit Link) which means accumulation stage is still "on" and this is not a price to sell. This has also been confirmed by the recent buying by promoters at 30 levels.
5. We must continue to do SIP (Systematic Investment Plan) with free funds on a monthly.. weekly basis.

On the medium to long term (6 months to 1 year) I would project a 100% price increase is on the cards.
Generally promoter buying will be done for at least 300-400 % return (look at Venky's price move from 120 levels to 700+  giving 500% return and Venky's still going up ). We can be confident of the direction of price rise based on the fundamentals of GAEL: 400CR Market Cap, 1400Cr sales, 116CR Gross Profit and 60Cr Net Profit

PN: These are my personal views and opinion.. based on publicly available data about GAEL. Please do your own deep dive before investing. Share prices are liable to move in both direction and there is always a possibility to loose money.


Previous Article: GAEL: June 2010 Result Review: Strong Buy
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2 comments:

Kiran said...

Dear Sir,

I have been your follower for many months and shares your conviction on GA Exports. I have been a share holder since its public issue and I could experience only the wealth destruction. But, your views convince me that it merits investment chiefly on account of the management acquisition of shares through market purchases. Since you have been keenly following it, would you kindly enlighten me on how much the management has tanked up over the years. Has it been sufficient enough to start showing some integrity to the public holders?

Look at the results of Harrison Malayalam, a company belonging to the RPG (Goenka) group (CESC, CEAT group different from the Eveready Goenka group) with its registered office in Kochi. They are into all the grows in the hills of Kerala: rubber, tea, coffee, cardamom and pepper. Many of these commodities are at their life time high, especially rubber and cardamon. Pepper is at its recent high. Both tea and coffee are doing well too. But Harrison Malayalam has posted a loss!!!

Management integrity is of utmost importance in a publicly listed enterprise. Harrisons Malayalam has been siphoned out dry ever since the RPG group acquired it. The point I am trying to make is that even if commodity prices have touched all time highs, the company and its shareholders would never make any money when management integrity is lacking.

In the last couple of years, RPG groups vision for Harrisons Malayalam was to sell off its golden goose (rubber estates) in return for a few pieces of silver. These questionable deals have landed them in serious litigations with the state government. The government's contention is that the company had been selling lands on which it had no rights; it had only given these estate lands on lease. A few years earlier the Goenkas had tried to buy out the public shareholders for peanuts. The attempt was nipped in the bud when a small time private plantation company in Kerala came out with a counter offer which the mighty Goenkas could not even counter-bid.

What'sUp Prahalad said...

Kiran:

The first principle of investment is: "Donot Loose Any Money"

You are right.. Promoter Quality is of importance because it is one of the ingredients of how investors evaluate, price a stock.

The sad part is: It is not in our control.
======================
In India a large number of corporates have large promoter holding..
======================
My understanding is:
Previously: In India it was not "Acceptable" to display Wealth.. Wealth was acquired but never displayed.

Now: In India its no longer "Taboo" to be "Wealthy"..
======================
This change in status has seen companies claim: "A 15 Billion Dollar Company" Largest Increase of Billionaires in the World
======================
There is no doubt that GAEL has deep value.. The only question we are trying to Answer is: Will we get a piece of the hidden Value of GAEL??
======================
The truth is "I dont know?" ..Buying at a deep discount provides us with a support price.

Investment in GAEL right now is like jumping from the top of a building with a "Safety net" down to "Protect you"
It (The Value Proposition) will protect you from
"Loosing it All"
=============================
Look At Venky's in the previous 10 years the stock has never gone above 140 levels and now its at 750..

The Value proposition prevents the stock from going back to "0" and gives us an opportunity to be part of the "Upside"

Believe me GAEL is not your cup of "Tea" if you expect it to guarantee that it will take care of your financial worries..

As I do mention in my blog: PN: These are my personal views and opinion.. based on publicly available data about GAEL. Please do your own deep dive before investing. Share prices are liable to move in both direction and there is always a possibility to loose money.

========================
I dont understand:
1. You have been an investor in GAEL since its public Issue 1991 that's 20 years..
2. You still hold shares in GAEL?
3. You are buying stock in GAEL inspite of all your bad experiences for the past 20 years

GAEL has been paying dividents "Consistently since 1993" two years after going Public..

"Kiran" "Search Your Feelings"
========================
Promoters are buying at 30?? we are getting the shares at a discount to promoter buying (CMP: 29.20)
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- God grant me the Serenity to accept the things I Can't change
- Courage to Change the Things I Can
- And most of all "To KNOW The Difference"
========================
I had first recommended GAEL at 23

Trust me when the stock reaches a new high maybe 40 or 60 I am sure a lot of individual investors will bail out .. "Just like in Venky's a lot of people bailed out at 300 levels.."

But to expect Individual investors to bail out at 30 .. is setting the bar too low.

=====================
Anyway . even your story of the RPG Group had a happy ending..

"The attempt was nipped in the bud when a small time private plantation company in Kerala came out with a counter offer which the mighty Goenkas could not even counter-bid"

=========================
Value does have the ability to "find its way to the top" We all just need to be patient..

GAEL has a lot of value right now.. infact It would be really good if someone can provide a better value stock..

=happy investing
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