I know many of my readers, who invest in stock markets are trying
to figure out the answer to this question.
Kingfisher stock had a high of around Rs 30.9 in Feb 2011
and since then it has been a downward journey – it touched Rs 8.40 in August
2012 and since then has been languishing around Rs 15. Now we have this news
that Etihad airlines may take stake in the airlines. Both KF and Etihad have
not commented on this news. We also have
the news that 5 of its 42 KF planes have been taken back by lenders.
Yesterday, after the news of Etihad broke out, 85 lacs KF shares
have been traded in BSE and NSE. To get a feel of this number, the most
actively traded share in BSE and NSE yesterday was SBI and 23 lac shares
changed hands on this counter. The KF stock has gone up by 5% (it cannot go up
more due to controls by the regulator).The current price is Rs 15.7 (as of
12.12.2012)
The stock’s book value is -66.83 as per money control – what
it means is that in a normal transaction, the share holder must give you Rs 66.83
for buying the stock instead of you paying him Rs 15.7.
Now here is my take.
We all should have a core portfolio and a satellite portfolio.
The core portfolio is for long term investments and the satellite portfolio is
for short term opportunities. The split between core and satellite depends on
your life stage (age) and your risk tolerance level. For someone like me, I
have 90% core and 10% satellite. For my students, I would recommend 80% core
and 20% satellite. If you lose the satellite amount – you should not lose
your sleep. But if you lose your core amount – you should surely stop investing
(and come to me).
So here is the opportunity for investing in KF with your satellite
portfolio – I believe that the stock will go up for a few days – the final
value will be a derivative of the valuation that Etihad and KF managements
agree – but greed in the market will create opportunities for short term gains.
Do not wait for exit at peak – you will not be able to judge it. Exit once you
get a pre determined appreciation (may be 15%) .
Am I investing – No. But that is my personal decision.
Should you invest –
well decide for yourself. Remember today is 12.12.2012
Dear Sir, what do you say about the press release by Mallya saying he will get investors into KF before end of December??
ReplyDeleteIs it the stake of Etihad or any other?
Any such partnership agreement between two companies take time and till it is signed one cannot be sure -so we need to wait and see - having said that, Mallaya would be trying all that he can to get a strategic investor into KF
DeleteGood discussion sir..
ReplyDeleteI agree with you sir.
ReplyDeleteI have already burnt my hands with KF and in my personal opinion its good to go for other mid cap stocks than KF, my personal favorite mid cap banks.
Neha - avoid banks - esp mid caps and public sector ones - they have a fair amount of Non Performing assets that is not visible in the financial statements.
Deleteyou said this stock will rise for a few more days. Today it closed at 17.70. At this price it is trading at its resistance level formed by the previous top of September 12. The upward move may continue upto the next resistance level of Rs 20/-. I plan to sell at this level, which it may reach in a week's time.
ReplyDeleteYour post on King Fischer should have come a little earlier. Buying this share may be risky at this stage.
ReplyDeleteLara - till KF gets an investor, it will be very volatile and that is why I think there are opportunities - few days back there was optimism - right now there is pessimism as Jet airways looks like stealing Etihaad from KF - it is emotions like these that gives one short term opportunities. Having said that, I am not someone who invests for short term and my knowledge in this area is limited - I have many readers who are students and your professionals and they are higher risk takers than me - this note was mainly for them.
Deletethanks. you appear to have more knowledge. I shall visit your page regularly.
ReplyDelete