Hi Excel,
Buffet and Munger is it ? Its more like Thomson and Thompson from Tintin in our case 
Your theory about tax might be true for the smaller fish but quite difficult for the elephant in the room. Take for example Blue Dabeej in Liberty. How easy is it, to first sell and buy back and then sell again 14% of the equity, all in a matter of a few days??
regds
Hi ML,
it is very easy for one company to sell to another and reverse it after a day or two. very prevalent in Indian market. What we call as circular trading.
Regards,
excel,
with a lot of guys interested in liberty phosphates deal these days, what u say about circular trading might be difficult
plus who wants to provoke SEBI for miniscule gains when they are already booking huge gains.
I agree with manufactured luck logic.
hitesh.
Hitesh bhai,
It is even simpler. One even need not do circular trading. One company sells to another company and the second company applies in the open offer.
That does not mean that is am saying that there is no mis pricing all I am saying is the tax angle described by ML can not be the reason .
Regards,
Hi Excel,
Why try to judge how much is too much when it comes to flirting with the law, that too for somebody else??
All that we are saying is that certain investors have already smoked the full cigaratte. Now, if they dont hand over the stub in time to somebody else, they risk burning their fingers (with tax). People might not accept the stub from them if they dont see sufficient drags left in the cigarbutt. When to hand over is thus a judgement they need to exercise given the size of their position and expected liquidity at various price points.
Also, this is only a hypothesis. One cant be sure for somebody elseās actions. But is it really relevant?? After due thought, if we are happy starting a new relationship with a boy/girl, then does it really matter beyond a point as to why he/she broke up with a previous partner??
Hi
Please find below scenario analysis for Acceptance ratio. Not sure whether the below points can in anyway use to predict higher proportion of brain dead investors [will request experienced investors to help on this]
a) Shares in physical form consistently above 15% for last three years. Please note promoters shares are already in demat form. Can we use this info, to predict higher level of brain dead investors?
b) SHs holding 3,000 shares or less was quite stable between 2010 to 2012 compared to SHs with nominal value [ by nominal value I understand face value] upto 1 Lakh which have declined from 17% to around 11%. It means not much churning in retail shareholders [Max Share price was around 60 in Mar 12, so 3000 shares mean an inv of around 1.8 lakh]
|
Acceptance ratio (AR) |
|||
|
Scenario |
I |
II |
III |
|
Public |
38.6% |
38.6% |
38.6% |
|
Brain dead investors |
5.0% |
8.0% |
10.0% |
|
Participating one |
33.6% |
30.6% |
28.6% |
|
Open offer |
26% |
26% |
26% |
|
AR |
77.4% |
85.0% |
91.0% |
|
Mar-10 |
Mar-11 |
Mar-12 |
Dec-12 |
|
|
Physical form shares |
2,281,948 |
2,267,448 |
2,258,148 |
NA |
|
% of total SHs |
15.8% |
15.7% |
15.6% |
NA |
|
SHs holding less than 10,000 shares (per annual report) |
19.2% |
21.5% |
17.6% |
NA |
|
SHs holding less than 3,000 shares |
13.8% |
15.0% |
12.3% |
NA |
|
SHS with nominal value * less than 1 Lakh |
16.8% |
18.3% |
15.2% |
10.7% |
* Nominal value is face value and not paid up share capital
Updates on Open Offer 04 Feb 2013 11:15
Axis Capital Ltd (āManager to the offerā) for and on behalf of Coromandel International Ltd (āAcquirerā) has informed this Detailed Public Statement (āDPSā) in respect of the Open Offer to the equity shareholders of Liberty Phosphate Ltd (āTarget Companyā), pursuant to and in compliance with Regulation 13(4) and other applicable provisions of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations 2011 and subsequent amendments thereto (āSEBI (SAST) Regulationsā or āRegulationsā), pursuant to the Public Announcement (āPAā) filed on January 24, 2013 with BSE Ltd (āBSEā) and the Target Company on January 28, 2013 with Securities and Exchange Board of India (āSEBIā) in terms of Regulations 3(1) and 4 of the SEBI (SAST) Regulations.
The Offer:
The Acquirer is making an Open Offer to acquire upto 37,53,933 fully paid up equity shares of the face value of Rs. 10 each (āOffer Sharesā), representing in aggregate 26% of the Equity Share Capital of the Target Company at a price of Rs. 241/- (Rupees Two Hundred and Forty One only) per fully paid up equity share payable in cash, (āOffer Priceā) in accordance with the provisions of the SEBI (SAST) Regulations and subject to the terms and conditions set out in this DPS and the letter of offer in accordance with the provisions of the SEBI (SAST) Regulations (āLetter of Offerā).
Tentative Schedule of Activity:
Identified Date - March 06, 2013
Date of commencement of the tendering period (Offer Opening Date) - March 20, 2013
Date of closure of the tendering period (Offer Closing Date) - April 04, 2013
Me out at 224ish average.
I too bailed out at around 222. Good 5% low risk return within a few days amid market turbulence.
Now onwards I think I will be paying more attention to these special situations bcos of the low risk returns they provide.
orient refractories is in same boat, yet to start up move
Am very new to special situations. Everyone seems to berecommendingsell here . Can somebody help what happens if I still hold. It is still a good company going to be acquired by a very reputed company.
PS - I bought around 90 per share and donāt mind selling . but want to understand the impact of this acquisition on long term prospects and what happens if I just hold .
Even at current price, I guess market is factoring only 80% acceptance ratio. If one is finding other attractive opportunities its good to exit as easy returns are already made. I think there is possibility of another 3-5% upside from current price. I will prefer to exit a week before opening of tendering period.
| Market assesment of Acceptance ratio | |
| Required rate of return | 14% |
| Current market price | 224 |
| Likely exit price | 184 |
| No. of shares | 1 |
| Acceptance ratio | A |
| Period (months) | 2 |
| Expected inflows by Arb | 229 |
| Open offer price | 241 |
| Acceptance ratio | 79.0% |
Liberty down to 217 nowā¦
241 is still 11% return in a short time frame.
But why has this gone down again??
Is this an excellent opportunity for short term returns?
Share has tumbled down to 97 level. Now is this something that was expected by special situation players how is the postmortem of things work in these cases?
Prabeesh
In Open offer one continuously need to assess whatās the acceptance ratio market is factoring. I have seen that generally market gets the acceptance ratio right just before opening of open offer. In special situation, which is basically event driven, its better to exit closer to event.
I did not anticipate such steep decline, but as a rule I exited one day before opening of open offerā¦
Anyone has any idea regarding the quality of new management of Liberty phosphate.
The company has shown decent past growth, good ROE and is quoting at a PE of abt 5 only.
Mainsh it has been acquired by Coromandel of Murugappa groupsā¦ They one of the very few groups who have made money for small investors in the stock marketā¦so there is not much of a question on their management
Hitesh bhai
potato ji
Any view on liberty now quoting at a PE of 2.5 ?
Lolā¦ āpotatojiā !!!
I wont consider the trailing profits, which had suddenly spiked up!!
Would prefer to wait for a couple of more quarters resultā¦
Another thing, if one considers an opportunity cost framework, is this a company/business one would like to buy? Its no longer a āspecial situationāā¦
