tag:blogger.com,1999:blog-7832676223555801988.post5369821661412926910..comments2023-05-07T16:38:33.184+05:30Comments on Manufactured Luck: Wheels India Rights Issue – A Free Lunch for minority investors??Manufactured Luckhttp://www.blogger.com/profile/17054602349579736386noreply@blogger.comBlogger16125tag:blogger.com,1999:blog-7832676223555801988.post-76940418963857499412015-02-06T00:49:15.220+05:302015-02-06T00:49:15.220+05:30very informative, thanks for such a good articlevery informative, thanks for such a good articleSHVhttp://sharemarket-beta.blogspot.innoreply@blogger.comtag:blogger.com,1999:blog-7832676223555801988.post-59357308927169858902015-02-03T11:28:12.825+05:302015-02-03T11:28:12.825+05:30Hi carpedious,
We have used 200 in the denominato...Hi carpedious,<br /><br />We have used 200 in the denominator as that is the total amount of risk capital. The capital outlay on account of the additional shares has no downside risk to it, but only has an opportunity cost element to it and thus has been ignored.<br /><br />Rather than the percentage return generated, it might be useful to think about the absolute return instead since denominator can change based on your judgement of the capital outlay in this trade.<br /><br />Thanks for your thoughts.Manufactured Luckhttps://www.blogger.com/profile/17054602349579736386noreply@blogger.comtag:blogger.com,1999:blog-7832676223555801988.post-85253048990232756292015-01-31T13:11:39.286+05:302015-01-31T13:11:39.286+05:30Hi,
in the example you have mentioned the retur...Hi,<br /> in the example you have mentioned the return as 33/200 = 16.67% but shouldnt the return be 33/300 = 11% as any gain is coming only from the additional shares received.carpedioushttps://www.blogger.com/profile/15130994318744743682noreply@blogger.comtag:blogger.com,1999:blog-7832676223555801988.post-74048236428476767692015-01-13T16:36:00.979+05:302015-01-13T16:36:00.979+05:30Hi, any view on the Can fin homes rights issue? Hi, any view on the Can fin homes rights issue? benguphttps://www.blogger.com/profile/11944992181542757371noreply@blogger.comtag:blogger.com,1999:blog-7832676223555801988.post-80985951859956429892014-07-24T10:17:06.748+05:302014-07-24T10:17:06.748+05:30Hi, Interesting special situation. Looking back ho...Hi, Interesting special situation. Looking back how did it work out ? I see that the price is 740 now so it has been a good trade, also what is the taxation impact? Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7832676223555801988.post-31371998393055623372014-04-07T22:14:52.613+05:302014-04-07T22:14:52.613+05:30Hi, You have mentioned that You are long on Wheels...Hi, You have mentioned that You are long on Wheels India. Presently it is at 550+. are you accumulating at this price? KKRhttps://www.blogger.com/profile/01207928851925724977noreply@blogger.comtag:blogger.com,1999:blog-7832676223555801988.post-68921021960986988092014-03-29T15:30:46.412+05:302014-03-29T15:30:46.412+05:30Yes. However, the basis of pro rata allotment is t...Yes. However, the basis of pro rata allotment is the no. of shares as on the record day and not the number of times overbid..Manufactured Luckhttps://www.blogger.com/profile/17054602349579736386noreply@blogger.comtag:blogger.com,1999:blog-7832676223555801988.post-53431019644057954352014-03-28T16:25:45.657+05:302014-03-28T16:25:45.657+05:30Hi, I have a general question regarding the subscr...Hi, I have a general question regarding the subscription in the right issue. If in a company right issue is under-subscribed. Can willing public participants and promoters apply for remaining offer shares on pro rata basis at the same time? Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7832676223555801988.post-36578419959247798612014-02-22T10:51:28.466+05:302014-02-22T10:51:28.466+05:30Ex-Rights price seems to be settling at Rs.650. It...Ex-Rights price seems to be settling at Rs.650. It will drop further when the rights shares are allotted and become tradeable. Assuming cum-rights price of Rs.1,050, the break even point of selling cum-rights vs ex-rights is as below.<br /><br />Loss on 20 shares for selling ex-rights = 20 x (650-1050) = Rs.8,000<br />Profit Required to recover the above = 51 x (556.86-400) = Rs.8,000<br /><br />So the million dollar (or 8,000 rupees) question is will the price remain above Rs.557 when the rights shares come into the market.Ajitnoreply@blogger.comtag:blogger.com,1999:blog-7832676223555801988.post-25790033231305705102014-02-13T10:57:13.459+05:302014-02-13T10:57:13.459+05:30With the closing cum rights price of 1054.55, the ...With the closing cum rights price of 1054.55, the theoretical ex-rights price works out to be 936.89. However, the stock today is in a downward freeze at 749.55. With this momentum, I don't think the market will allow an exit at or about this theoretical ex-rights price as of now but seems it may drift toward ~500+ in another day, to match the diluted price with the market price before rights announcement. Let's see.Anonymoushttps://www.blogger.com/profile/13616689623847835096noreply@blogger.comtag:blogger.com,1999:blog-7832676223555801988.post-42796637469015114412014-02-09T13:08:01.583+05:302014-02-09T13:08:01.583+05:30Hi Gaurav,
Glad you liked the piece. Without spec...Hi Gaurav,<br /><br />Glad you liked the piece. Without specific view on Piramal Glass, we are not big fans of the delisting theme. You can read our earlier piece on the blog titled 'Extraordinary popular Delusions" to get a gist of our thoughts..Manufactured Luckhttps://www.blogger.com/profile/17054602349579736386noreply@blogger.comtag:blogger.com,1999:blog-7832676223555801988.post-84626780366599587612014-02-09T00:27:57.674+05:302014-02-09T00:27:57.674+05:30Hi Abhinav/Niren,
Thanks for the great analysis o...Hi Abhinav/Niren,<br /><br />Thanks for the great analysis of the Wheels rights issue. Would like to know your views on the Piramal Glass delisting as well.Gaurav Somanihttps://www.blogger.com/profile/06344730063400915937noreply@blogger.comtag:blogger.com,1999:blog-7832676223555801988.post-18115693635289678632014-02-08T18:43:45.984+05:302014-02-08T18:43:45.984+05:30Hi Jitendra,
Thanks for your comments. Sharp move...Hi Jitendra,<br /><br />Thanks for your comments. Sharp movements accompanied with high volume but low delivery % age is making us increasingly risk averse. While in theory the arbitrage continues to remain interesting but since healthy returns seem to have been made upfront, we are asking ourselves whether 'a bird in hand is better than two in the bush'. As always make your own judgement backed by independent analysis..Manufactured Luckhttps://www.blogger.com/profile/17054602349579736386noreply@blogger.comtag:blogger.com,1999:blog-7832676223555801988.post-26013066878216452832014-02-08T15:42:08.741+05:302014-02-08T15:42:08.741+05:30It is a very good thought provoking analysis.........It is a very good thought provoking analysis...... but instead of decrease in price in last 3 trading sessions price has reached to 1050 and also volume from avg 8-9k to 49k, 129k & 28k.....can u plz share ur thoughts on this and how this will impact the arbitrage opportunity??jitendrahttps://www.blogger.com/profile/18329437358826209492noreply@blogger.comtag:blogger.com,1999:blog-7832676223555801988.post-23418859981953800112014-02-04T22:18:12.782+05:302014-02-04T22:18:12.782+05:30Thanks JK,
We cant be sure of the outcome and thu...Thanks JK,<br /><br />We cant be sure of the outcome and thus dont think that it is a riskless trade. We cant forecast wether Wheels India at a price of 400-450 will or will not interest somebody, just as we cannot explain why it had been trading at close to 700 even prior to the rights issue announcement. There are a lot of stocks which we find expensive but the market still buys them. Likewise we find some stocks quite cheap but market for some reason does not agree :) The only thing possible to judge is wether the risk reward is favorable and thus size your position accordingly.<br /><br />Also, stock price in these situations can fall rapidly if a lot of arbitrageurs are simultaneously seeking exit. The last couple of months of delivery volumes do not seem to suggest any meaningful interest from them so far.<br /><br /><br />Manufactured Luckhttps://www.blogger.com/profile/17054602349579736386noreply@blogger.comtag:blogger.com,1999:blog-7832676223555801988.post-63171986041276979642014-02-04T20:23:53.218+05:302014-02-04T20:23:53.218+05:30Looks like a good risk arb opportunity. Just 1 que...Looks like a good risk arb opportunity. Just 1 question (that is the risk)-<br /><br />Imagine currently this is selling at 400 Rs per share. Will you buy it then?? <br />If no, then are we not hoping (praying) that the stock won't fall before we sell completely.<br /><br />Fundoo_Pupilhttps://www.blogger.com/profile/01128565386470249700noreply@blogger.com