Everyone thinks life is one upward, smooth trajectory. They think of Cinderella in her big castle and forget that she spent decades scrubbing floors, being beaten, and locked in a cold room. Between “Once upon a time” and “Happily ever after” a lot happens. Not all of it is good.-by Joshua Kennon
Day: January 15, 2013
In theory, insider buying or selling is supposed to be a great indicator of future stock performance.
But I wonder if it works in India.In India, insiders (aka ordinary employees) are usually the last to know anything !!
Some real life anecdotes to illustrate my point:
1.Some friends worked in Financial Technologies when all it made was Odin Software.They got stock options in the 20/30 Rs range.As soon as the stock hit 100, almost all the employees sold their shares…thinking yeh sau se upar thodi jayega.Within a year or so, FinanTech crossed into 4 figures or more !
2.Another friend worked in WNS.He had a ton of stock options.WNS listed handsomely and once the lockin period was over, he had an opportunity to sell at 40$/share.He held on as he read a research report (!) which said that WNS would be the Infosys of the BPO sector.He got out a few years later around 9$/share
3.This is an example of classy inaction.eClerx provides KPO services to clients such as Lehman,MS etc.In the financial crisis of 2008, the stock was hammered out of shape and reached sub 100 levels.No one,not the employees nor the promoters bought their own stock in their own company which they know so well.Around 2 years later, the stock crossed 700 Rs !
These examples suggest tracking insider buying/selling in India is probably a huge waste of time.You are better off doing your own research and following your own processes.
Cement stocks take it on the chin
I always find it interesting when a sector under performs when the markets are doing well.
Cement has been the big underperformer of 2013 so far as can be seen from the table below (Close of 31 Dec,2012-Close of 15 Jan 2013):
Company | Rise/Decline in % |
BIRLACORPN | 7.083471899 |
NCLIND | 4.485488127 |
ANDHRACEMT | 3.333333333 |
BURNPUR | 2.325581395 |
OCL | 1.061712011 |
KAKATCEM | -0.777047221 |
AMBUJACEM | -1.443504231 |
PRISMCEM | -2.104208417 |
SANGHIIND | -2.232142857 |
BINANIIND | -2.372262774 |
SHREECEM | -2.56092835 |
INDIACEM | -2.916895982 |
ACC | -3.05823209 |
ULTRACEMCO | -3.310174697 |
BVCL | -3.553299492 |
HEIDELBERG | -3.726708075 |
MADRASCEM | -5.571370476 |
GUJSIDHCEM | -5.576208178 |
JKCEMENT | -6.493686693 |
KCP | -7.3089701 |
CHETTINAD | -8.026554013 |
SAGCEM | -8.631977946 |
DECCANCE | -8.787878788 |
MANGLMCEM | -10.45679692 |
JKLAKSHMI | -12.22531724 |
Linkfest:Jan 15, 2013
Some stuff that I am reading today morning:
TCS beats street estimates with 26% jump in Q3 profits (BusinessLine)
It’ll need a miracle to escape stagflation in 2013 (Firstpost)
TCS has given 24000 offers on campus (FE)
BKC neighborhood to get elite residents (Mint)
Making a killing by selling pomegranates (BS)
Why is Narendra Modi opposed? (Centreright)
The purpose of this site (TRB)
Want lower returns?Try sectoral timing (RickFerri)
The dark side of numbers (AswathDamodaran)
6 provocative predictions for 2013 (DailyReckoning)