Views on Life & on Equity Investing

Wonder, Wealth & Abundance

SWeT Effect™

with 62 comments

I had cooked up a term little while ago for a stock whose price performance does not correlate at all with broader market indices as Quantum Stock™  usually a micro or small cap. While this world does not quite suffer from paucity of acronyms, I thought of contributing some to the field of neologism, just because I can.


Time for definition:


SWeT Effect™ represents a business group dynamic where in due to lack of corporate governance or strong family ties one notices Stealth Wealth Transfer from relatively wealthier entity to less wealthy in its many forms, Preference Shares, Loans, Property Purchase, Outsource part of business etc.  Just as heat transfers from hot region to cold, the group companies under same management, sometimes, if not always, experience drainage of wealth. While investors at large would moan and groan, rather than spending energies on things we cannot change, an investor needs to get away from such an organisation diverting its wealth.


SWeT also acts as a homophone of Sweat which repels others individuals (with well tuned olfactory system) from the one experiencing Sweat. In short SWeT or Sweat are both repulsive. However, there is another opportunity available, which is to side with party/cold entity receiving bread crumbs or leftovers. This can offer some speculative profits.


A few examples that come to mind are Indiabulls Real Estate investing in StoreOne, or Navin Fluorine loaning in Mafatlal group companies.


Written by amitdipsite

February 24, 2012 at 11:58 pm

Posted in Uncategorized

62 Responses

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  1. HI Amit,

    Sesa- Sterlite Merger. Swap ratio is 3:5.
    I can buy 5 sterlite at Rs 590, sell 3 sesa in futures at Rs 687.. and make Rs 97 in the process..

    Am I missing something??
    What are risks other than event & time risk?
    Please suggest.

    JK

    February 26, 2012 at 10:25 am

  2. Hi Amit

    Due to recent strike in Dunlop/Falcon,do you think its time to take complete exit from falcon tyres?

    bb

    February 27, 2012 at 5:53 am

  3. Hi Amit,

    Any view on Glodyne Technoserve Pvt Ltd?

    Does it rank good as a Long term investment?

  4. Hi Amit,

    I've bought photoquip india @ 52. Please let me know your view on this. Can I average it now. I'm looking your suggestion from long term point of view (1+ year)

    Nalajala

    March 3, 2012 at 3:04 pm

  5. Have you heard of negative amortising home loans ? Meet the great financial engineers

    Bankrupt American Banks

    Amit Arora

    March 4, 2012 at 6:02 am

  6. Photoquip: I have reduced and not buying.

    FILA: Advertising on biggest tennis website http://www.atpworldtour.com

    Amit Arora

    March 4, 2012 at 6:13 am

  7. Anyone having Master Franchise in India of Polar Heart Monitors is bound to make millions. Their Global Market share is 50%+ with 80%+ market share in most countries

    http://www.youtube.com/user/polarusa

    http://www.polar.fi/en

    http://www.polarusa.com/us-en

    https://www.polarpersonaltrainer.com/

    I can't see any India Master Franchise

    http://www.polarelectro.co.uk/uk-en/where_to_buy

    But Johnson Health Tech has it for Taiwan

    http://www.johnsonfitness.com.tw/products_list2.php?cat_id=199

    http://www.facebook.com/prolinefitnessindia/posts/143208049134591?notif_t=feed_comment_reply

    Amit Arora

    March 5, 2012 at 9:29 am

  8. Hi Amit,

    Any view on Glodyne Technoserve Pvt Ltd?

    Does it rank good as a Long term investment?

  9. Hi mate,

    I am not following it closely anymore. After tragedy of Allied Digital and Zenith etc. For long term buy a simple company like housing finance company or one that makes equipment for shitting eg Cera, HSIL

    regards

    Amit Arora

    March 5, 2012 at 10:48 am

  10. Confirmed now that Cravatex are the distributors of Polar Electro in India, exceptionally great company

    http://en.wikipedia.org/wiki/Polar_Electro

    You can email rahul.patil@cravatex.com for more details

    Amit Arora

    March 6, 2012 at 6:28 am

  11. Almost the same thing as the movie 'Too Big to Fail' but little more boring to watch the documentary version😉

    Raja Panda

    March 9, 2012 at 9:26 am

  12. hi amit…i was just wondering you were very bullish about the upcoming changes in education sector and companies like educomp ,everonn etc…what made u change ur stance or better opportunities came along ?
    Sorry for being naive

    Aditya

    March 14, 2012 at 7:30 am

  13. This is what I said on 7th December 2010 at

    http://multibaggersindia.blogspot.co.nz/2010/12/fd-vs-shares-poor-vs-rich-middle-class.html

    “I would personally not buy any Education company, the space is getting crowded and is very fluid. That's not to say, that some won't be multibaggers in this space. But its hard to tell which ones ? I would stick to big two only if I wanted to play education coz size of opportunity is huge. Everonn and Educomp. Although I don't have any.”

    and on 25th June 2010 at

    http://www.theequitydesk.com/forum/forum_posts.asp?TID=2777&PN=4

    “his was my email to P Kishore
    ————————————————–
    From: Amit Arora
    Sent: 23 May 2010 02:58AM
    To: kishore@everonn.com

    Dear Mr Kishore,

    Let me first congratulate you for the great work you are doing and have done. I am a well wisher of Everonn and a shareholder with your organisation, so naturally wish success for Everonn Education.

    I have been doing greater research in depth in organisations and have been an avid reader of corporate cultures. I know that a great organisation can be built only if it has great team spirit. I have been put off after reading Tapan Panda's blog at following link regarding the inter personal politics that may be distracting him from work or others.

    http://merajiban.blogspot.com/2009/10/how-useless-people-are.html

    Can you please look into this issue.

    Kind regards

    Amit Arora “

    and here

    http://www.theequitydesk.com/forum/forum_posts.asp?TID=2777&PN=3

    “I have an interesting update here.

    I was tracking Senior management of this company and found unpleasant statements publicly written by Tapan Panda.

    http://in.linkedin.com/in/tapanpanda68

    He publicly vent displeasure of working in Everonn, wont be surprised if he leaves soon. He must have got a good telling after my email to MD.

    Following blog entry has been delete by Tapan Panda few days after I emailed.

    http://merajiban.blogspot.com/2009/10/how-useless-people-are.html

    Rest of his blog is as it is

    http://merajiban.blogspot.com

    I wont make much out of it but would prefer to avoid a company where Senior management have wide rifts.

    To prove I am correct visit http://www.google.com

    type in following query:

    site:merajiban.blogspot.com how useless people are “

    Interestingly Tapan Panda no longer shows Everonn in his work experience and there are other Corp. Governance issues with Top two.

    Amit Arora

    March 14, 2012 at 11:33 pm

  14. From Someone:

    I recently finished watch India Wells ATP 1000 event http://www.youtube.com/watch?v=1mnhB6w5u_E (Federer v/s nadal in semi final). All the official personnel like linesmen, ball boys and girls, umpires etc are wearing FILA apparel

    Amit Arora

    March 19, 2012 at 8:59 pm

  15. Uploaded yesterday

    Amit Arora

    March 20, 2012 at 5:25 am

  16. Rahul Paliwal

    March 20, 2012 at 5:54 am

  17. https://www.facebook.com/photo.php?fbid=2836064945367&set=o.208119385870792&type=1&theater

    Fila: 100 Years of Sport and Style I know right? They are soo comfy! Just wait, in a year, everyone will have a pair!

    Rahul Paliwal

    March 20, 2012 at 6:04 am

  18. Visited few sports stores, there are four global brands in HRM – heart rate monitors. Polar, Nike+, Timex and Garmin. 50 Billion $ Nike chose to partner with Polar.

    http://nikeplus.nike.com/plus/products/sport_band/

    http://www.polarusa.com/us-en/products/accessories/Polar_WearLink_transmitter_Nike

    http://store.apple.com/us/product/H1922ZM/A

    Market would be very small in India like Golf, less than 100 crores per annum so far.

    Amit Arora

    March 22, 2012 at 7:09 am

  19. Hi amit,
    what is your idea behind buying into titan and page , they might not see any pe expansion or you satisfied with the growth itself because of them being niche players and having strong moats?
    And, do u feel we could see some kind of margin expansion with titan in the future ?

    Aditya

    March 22, 2012 at 7:52 am

  20. I recently bought fila DNA series shoes…i visited all the ecommerce website e.g Myntra, Jabong, Yebhi. Myntra had better collection than everyone else (so far as Fila shoes are concern)and offering better price.

    Rgds,

    Bhushan

    March 22, 2012 at 11:48 am

  21. Thanks Bhushan,

    Let us know you feedback after use. Does it have soft or hard sole ?

    I got one Fila shoes, low end around 1500-1800 range or so and the ones with hard soles do rub off. Their Nylon T shirts are more durable and lasting than Cotton T shirts, thats the challenge of outsourcing.

    Amit Arora

    March 22, 2012 at 8:57 pm

  22. Any opinion on Maxwell, Rupa& Company. This is for comparison with page

    sidhartha

    March 23, 2012 at 4:30 am

  23. FILA Flash Mob at Indian Wells

    Amit Arora

    March 23, 2012 at 5:22 am

  24. Underwears are hot in India in more than one way, its the secondary market that is too hot to handle. Page is many time better than Rupa and Maxwell

    Amit Arora

    March 23, 2012 at 5:28 am

  25. Had observed the folowing in my city (hyderabad, IT hub) –

    1. Page (Jockey) has dedicated shops in the city

    2. Spoke to couple of shopkeepers in the markets.Maxwell has highest sales , followed by Rupa. These are not dedicated stores, these are shops where middle class flocks

    3. Price differential between page and maxwell/rupa is close to 50%.

    4. Page margins are definetly higher, from a sales volume maxwell /rupa seem to be doing better.

    sidhartha

    March 24, 2012 at 5:03 am

  26. New Proline website, has some Polar products and also sell http://www.miha-bodytec.de at http://www.prolinefitness.in

    Amit Arora

    March 26, 2012 at 3:40 am

  27. That's pretty much the story of whole world, greed, palm grease and minority of rich and mad ruling masses. More transparency required in each decision, bad news for PSU banks too

    Amit Arora

    March 26, 2012 at 10:05 pm

  28. Dear Amit

    History has proved that Quality Small Caps will outperform Mid and Large caps in long term because all Mid and Large caps were small or micro caps once upon a time.But in a Country like India where Govt and most of the people are extremely corrupt and economic scenario is very unstable, Sometimes I think it is safe to invest and trade in very well managed companies like HDFC,HDFC Bank,Bajaj Auto, even though upside is limited.Investing and Trading in a disciplined way in such quality stocks can also give 20-25% return per annum.TTK prestige was trading in the range of 100 Rs for 5 years from 2004 to 2009. One should have big patience to stay invested in small caps for long term.I got HDFC Banks Q4 advance tax news last week and it was very good and stock price was around 497 and it moved up to 522 today and it can move up further to 550 after the results irrespective of rate cut from RBI .Instead of investing 1X amount in small cap for 30% return one can invest 2X in such quality stocks for 15% return.

    Regards
    Manjunatha

    Manjunatha

    March 27, 2012 at 3:23 pm

  29. Dear Manjunatha,

    The investment philosophy evolves with time like us. While all money should behave like sensible, hard earned and old money, with less money one can put in a single stock or couple, but we won't do that with 50 crores. As you have guessed, one would not have done bad with even BSE 30 over last few decades. In small caps many fail and for each TTK there are twenty stagnant stories. Consistency of returns is missing in small caps, there are 100s of good ones which are market leaders in their field, but we can't say with even 25% confidence that they will grow @ 20% for next 4 years. eg: Resonance Specialties

    Regards

    Amit Arora

    March 27, 2012 at 9:59 pm

  30. What are your views on e-clerx services ?

    Shashi

    March 28, 2012 at 8:01 pm

  31. You need to keep in mind that 90% revenues come from five customers, it has strong tailwinds and management

    Amit Arora

    March 28, 2012 at 8:41 pm

  32. To further add, all bribe mongers on each side must have justified – once we have a billion dollars – we'd deploy it in social welfare. That is exactly how India got to stage of 8 years wait for Bajaj Scooters. As a wise man said, “Road to Hell is paved with good intentions.”

    Amit Arora

    March 29, 2012 at 8:35 pm

  33. A Fresh perspective and brand new article on your reading of Market is much awaited, Amit!

    Rahul Paliwal

    March 31, 2012 at 4:03 am

  34. I second it.

    Stock Investor

    March 31, 2012 at 7:33 pm

  35. Thanks to online media:

    Jabong is 103rd most visited website in India.

    Myntra is 165th most visited website in India.

    Source Alexa.com

    Check out what women (who buy lots of pairs) are buying, sort them by popularity / whats hot in sneaker / casual shoes category.

    http://www.jabong.com/women/shoes/womens-sneakers-lifestyle/

    http://www.myntra.com/women-footwear-casual-shoes

    Amit Arora

    April 8, 2012 at 4:47 am

  36. Role Model for Young India:

    http://soda-india.in/sarpanch

    Amit Arora

    April 8, 2012 at 5:41 am

  37. Hi Amit

    Interesting point from Sunil Singhania, Head, Equities, Reliance Mutual fund.

    We see a lot of potential re-rating of old pvt sector banks. India is an under banked country. In emerging countries, the banking sector grows at alomost 2 times of the GDP.So,opportunities are huge in the sector.

    Regards
    Manjunatha

    Manjunatha

    April 10, 2012 at 11:53 am

  38. Hi Amit,
    What do you think of Cosco Ltd?It is also a brand product and 75% held by promoters.
    Have a look at La Opala RG Ltd as well.In glassware.Branded quality.
    Looks like the Intec Info merger has no negative effect on Intec Cap.

    Rajeev Desai

    April 11, 2012 at 2:31 pm

  39. Banks are great to ride India's boom as are NBFCs as long as lending is conservative. Yes Rajeev, La Opala is decent company. Cosco is struggling amongst multinational brands. I am not very sure about it. Has potential.
    ==================================================

    New site launched

    http://world.passportplayer.com/

    Amit Arora

    April 12, 2012 at 9:07 am

  40. Samtex Fashions – Obscure, Ugly but probably one of the cheapest opportunities out there
    Samtex Fashions

    Consolidated Turnover for TTM is around 750 crores and EBITDA is 54 crores

    This company has a Garment Business which is listed and owns 100% of a Rice Company whose name is SSA International

    The standalone numbers are ugly but the Consolidated Numbers are Mouth Watering

    Almost all the Consolidated Debt is tied to the Paddy Inventory that it holds

    Run by decent management which is not very open in communicating with fellow shareholders but is competent and knows what it is doing

    Recently took a Convertible Warrant issue at a big premium over the current stock price

    The market cap is less than half of the EBITDA

    This type of a business usually trades at around 15-20% of sales which makes it a market cap of 110-150 crores, all that is required is patience and loads of it

    Value Fiend

    April 18, 2012 at 2:39 pm

  41. Hi Amit…
    Just wanted to know your position regarding Wim Plast..everything so far as financials are concern looks promising and on uphill just one concern regarding promoters involvement in Sanjay Dangi case…
    would it be wise to ignore their involvement in the said scam…
    let me know your views….

    Bhushan

    April 21, 2012 at 8:57 am

  42. Sir,
    Will you suggest investment in KPIT CUMINS for long term?

    kuheli

    April 22, 2012 at 1:38 am

  43. http://equity.co.kr/upfile/issue/2012/04/19/1334815459159.pdf

    Global Revenues from 1 Billion USD in 2009 to 2 Billion USD today. Can do double digits USD Billion.

    Amit Arora

    April 23, 2012 at 9:58 am

  44. hi Value Friend,

    companies with susidiaries are good only if they announce devidend some time.no dividend in the history tells that they are intrested in sharing anything with minority share holders.
    it will remain a value buy/hidden gem forever.

    bujjanna

    May 1, 2012 at 6:00 am

  45. Hi Amit,

    I've backtested your picks – Absolutely fantastic. Keynes had a similar style of investing if I correctly recall!

    Wanted your advice on whether I should be picking Cravatex, Page and Samtex at this price and point in time?

    fola

    May 1, 2012 at 7:40 pm

  46. Charlie Munger:

    I do not want educated and smart young men of my country do daily trading. Write software for high frequency trading, what good does it do to civilisation ? That just makes them rats in someone else's granary.

    I would make Michael Lewis look like a piker and Paul Volcker like a sissy in curbing leverage in society.

    Amit Arora

    May 5, 2012 at 9:35 am

  47. Hii Amit ji can I buy cravatex at 680.00 level plz reply thanks

    ajit

    May 5, 2012 at 6:34 pm

  48. Cravatex – I'm invested

    Globus Spirits – No reaction to news, not filed on BSE
    http://www.indiainfoline.com/Markets/News/Globus-Spirits-signs-franchisee-bottling-agreement-with-USL/5406648170

    RS Software: 45 crores cash + liquid funds in hand as of March 12, 18 crores advance tax

    Amit Arora

    May 5, 2012 at 10:52 pm

  49. Hi Amit,
    Last year RS software paid only 4.65Cr tax for 30Cr PBT. 18Cr tax means around 120Cr PBT this year? Until Q3 they have reported only 27 crores PBT. That means ~90Cr PBT in Q4 ?
    Or my understanding is wrong ?

    iamvinod

    May 6, 2012 at 12:01 pm

  50. Advance tax is for next year, Q4 is already out. Check growth in ASIA

    Amit Arora

    May 7, 2012 at 10:49 am

  51. amit bhai price of cochin min has quadrupled in six month , dont u think that entering at this price might be too risky

    zulfiqar

    May 10, 2012 at 11:55 am


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