Monday, December 10, 2012

Delisting - An Unfair binary game !!!


It has almost been a year since we last presented on the delisting theme. We have over the period further refined our thought process. Though we have made decent money with the theme, we have realised that risk reward payoffs in delisting are skewed and asymmetrical!!!

Heads you win some, tails you lose a lot !!!

We have humbly tried to share our findings in the following ppt made at an investor forum in 1st week of November 2012, look forward to your comments and suggestions.... plz see ppt at end of post

We would also like to update on certain developments which have materialised post the presentation:
  1. APW - They have still not announced the RBB (Reverse Book Building) process, having invested close to the indicative price level of 195, we have booked our profit and exited from the above considering the above uncertainty
  2. Ricoh - As we feared, the RBB failed because of book not getting complete
  3. Transgene - Shareholders block transgene move to delist ( Link  )
  4. IndoTech - Postal Ballot has passed however given the low level of participation and extremely high level of dissenting shareholders coupled with scattered shareholding has increased the deal risk considerably
  5. DISA - Announced Offer for Sale :( 
  6. Timken - We have exited from our position recommended last year at a profit, the continued investment/focus in unlisted entity doesn't seem positive.


The author (Mr. Ashish Kila) would like to thank his entire team, for their extensive help in preparation of the above note.

  • Nothing in this article is, or should be construed as, investment advice.
  • This is not an offer (or solicitation of an offer) to buy/sell the securities/instruments mentioned.
  • All the posts on this blog, including this one, are for educational and discussion purposes only.
  • Please do not take buy/sell or any investment decision based on articles you read on the blog. These are only meant to provide information and initiate discussion. Final decision is and always should be, yours and only yours.
  • We may or may not have a position in the stocks discussed on this blog. 


Carlos said...

Well said. There were quite a number of so-called "investors" who were thumping the table for this kind of investing. I disagreed then as I disagree now. Your conclusion that you might gain a little but lose a lot is bang on. Kudos for the objectivity and honesty.

Anil Kumar Tulsiram said...

Another excellent presentation. The cases you have quoted helped me understand how its very risky to bet on delisting in cases of fragmented holding which is dominated by retail shareholders. Ricoh India is a classic case where ~70% of those public Shareholders who assented in the postal ballot participated in reverse book building and delisting failed for want of enough shares. Thanks a lot again for sharing your learning.