Doing due diligence now after there are suspicions never helps. There is no point in visiting their kendras and trying to figure out if there is genuine business going on there or not - one needs a decent enough sample size to take this approach. Unless 30-40 ppl here get together, visit a total of say 300 kendras and then exchange notes and views, this approach will not yield any information that can be insightful enough to enhance the view you already have
In stories that unravel like this one will see rumours floating around that company may do buyback, hire a new auditor, director etc. The stock price then reacts to this with a UC for 2-3 sessions trapping people before the downward journey resumes. Case in point - see how the Treehouse saga unraveled over a period of almost 6 months
Once a stock falls 50% operators will game this further since they know there are enough gullible people out there who think the stock can bounce back 50% from the lows in a matter of weeks. Any volume information that you track needs to be adjusted for this possibility, once cannot see 2-3 random transactions and assume that some big buying is going on
On the face of it this has the makings of yet another sorry saga, I might be completely wrong on this but the trend so far suggests that one needs to be very cautious here since no one knows how deep the muck is. Investing for business reasons is easier and more logical, the moment one needs to cut through promoter intent and action it becomes very hazy
I once again repeat, be very careful. The behavioral bias documented as WYSIATI (what you see is all there is) can play very convoluted tricks, I have seen one very smart and successful investor lose his shirt and shorts in Treehouse because of this bias.
So, Vakranagee is going to spend Rs 1000 Cr for buy back and Rs 250 Cr as
dividend. Now what will the skeptics who say all the income and profits are
bogus are going to say. If all the profits are bogus where are they getting
this Rs 1250 Cr from. Will any promoter who is a fraud will spend Rs 1250
crore to prove he is not a fraud. I expect the new reasons from skeptics on
vakrangee to hate the company.
A fraud who made money from insider trading will keep it. Isnt it. Why
will a fraud give the money back he earned. In addition, this money has to
come from the company’s account. Not from the account of insider traders.
Are these people claiming that the insider traders will move their money
from their bank accounts to the company’s account. My goodness… These kind
of assumptions are aweful.
I recall when satyam deal with mytas failed on stiff opposition few years back,it had also announced buy back and shares went up temporarily.while I am not saying that position here also is the same,one needs to be careful and I believe all these messages are directed with that purpose.its individual,s choice to consider or ignore it.one may either lose the opportunity or money
Disc:not invested
With free cash flow negative in 10 of the last 11 years how and where is this cash to fund buybacks and dividends coming from? It’s not from operating business.
There are more ways of putting capital in the company when required than to pull out the capital. They can easily provide unsecured loans from promoters or body incorporate. They can even make circular entries from book of company itself, when u can show bogus expenses under other expenses head.
Everything and anything can be said using the word - can,can,can,can,can -
Such statements can be and against even Amazon. There has to be proof and
if anyone do such things it will be very easily caught through the trail of
the banks. And what is the logic for a company to do such things. Why will
a company which earned fraudulently will be in limelight to give back all
the money earned fraudulently. In short, there has to be proof and there
has to be some logic with questions like why will a fraud do such things…
"Promoter and Promoter group of the Company will not take part in the Buyback process and
would not tender any shares in the buyback process leading to high percentage of Buyback as %
of Free Float available."
Important announcement.
There was sebi investigation report on satyam posted on this forum few days ago.If u go thru, u will get some answers to your points.Fyi, satyam continued fraudulently for 7 yrs and no auditor/employee/share holder/regulatory body etc could find that the fixed deposits being shown were not actually there.there are numerous stories.since most of us can not find out all kind of such frauds, the management integrity and reputation has to be given top priority in my opinion.
Because satyam did it, the logic seems to be all companies will do it.
Inverted logic. I can also accuse all indian cos that way because satyam
did it, you are also a fraud. The system needs proof. We are a prrof led
system. We are not living in a banana country.
The sole reason for calling a company as a fraud is as below…
A company was one fiftieth of its current price 10 yrs back.
People wanted to but it ten yrs back. But did not buy (or)
People bought it ten yrs back and sold at a loss because somebody said it
is a fraud
And then the stock went up 50 times. People missed it and the others made
wealth. So, it is a fraud company
And people can allege that for ten long years a fraud company has done
business with all leading indian financial services cos and nobody had any
complaints with them
And even after such baseless allegations, none of the reputed indian
financial services companies have decided to break their ties with vakrangee
And people can allege that for ten long years, they can fake the revenues
and profits. With all the KYCs in place and auditors around. And with FIIs
owning close to 30% of the cos shares.
But nobody is able to prove anything.
And SEBI specifically looks at it and decides there is nothing wrong
And people will still make baseless allegations, just because, the stock
went up 50 times.
And it could simply be because they missed it. That can be the conclusion
if only baseless allegations are made without any proof or evidence.
Other people Can ask the same questions about the management of the
companies owned by the people who are making such baseless allegations.
“can we believe whatever those managements say”. The only solution is
proof. Not baseless allegations…
“Invert. Always Invert!” is a very valuable advice. First we must learn how not to lose money and learn vicariously from others’ mistakes. It happened with Satyam doesn’t mean it will happen with every other company but that it happened with Satyam after the price fell 50% and is happening with Vakrangee after the price fell 50% should be adequate correlation to say “No”. Now if someone has enough reason to negate this correlation, then I guess there is nothing wrong in taking a punt but I personally like learning vicariously and inverting.
Do you know what Satyam did. Their revenue was say Rs 70…And profits were
Rs 15. They must have paid a tax of Rs 4.5 on rs 15. instead what they did
was - they jacked up the revenues to Rs 100 and showed a profit of Rs 25.
And indeed paid a tax of Rs 7.5. So they were paying about 70% more tax on
an income which never was there. And they were paying this additional tax
for many years and that cannot go on for ever. A company cannot keep paying
taxes for years on on a revenue which did not exist. And the truth has to
come out.
So, just because Satyam did it, will every company has to be alleged that
way. If it is true in case of Vakrangee, they also will not be able to keep
paying this additional taxes for ever on an income which does not exist.
And the truth has to come out sooner than later. So Satyam could not it for
longer than ten years. But the allegers are saying Vakrangee is able to do
it for ten years now.
I can make the same allegation on the best of indian cos.
