CFI & CIT

Carolis · 1 CFI & CIT Sun Jun 19, 2011 5:20 am

Carolis

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These two shares were trading above 550 few months ago. Are these good to buy below Rs 400? Please tell. Thanks.

Monster · 2 Re: CFI & CIT Sun Jun 19, 2011 10:49 am

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These two companies are listed under investment sector. If you look at it's EPS or PE, it's not worth to hold. But wait, if you look at their investment portfolio it's worth more than the value it's currently trading now. Just read the notes in 4QFY11. You will get the answer. In certain companies their NAV is hidden. You have to identify that.

innam · 3 Re: CFI & CIT Sun Jun 19, 2011 1:02 pm

innam

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Monster wrote:These two companies are listed under investment sector. If you look at it's EPS or PE, it's not worth to hold. But wait, if you look at their investment portfolio it's worth more than the value it's currently trading now. Just read the notes in 4QFY11. You will get the answer. In certain companies their NAV is hidden. You have to identify that.

the counter argument is that the vast majority of the NAV is coming from investments in related companies (eg for CIT at March 31 2010-as per AR, related company holdings market value is 480million while cost was 90 million, so the "hidden" NAV was around 80 per share-may have grown to about 350 judging by the notes in F4Q11).
But here's the thing thses Incestuous inter related achcharu companies will never sell their inter group holdings (unless in a complete takeover) because this is how the owner families keep control. so this "hidden" NAV needs to be heavily discounted because it's unlikely to be ever realized (the only thing monority shareholders will see from this inter group investments is the dividends and the yield is ridiculously low to begin with)....another company in the same boat is LMF with their DIST holding.

Carolis · 4 Re: CFI & CIT Sun Jun 19, 2011 2:24 pm

Carolis

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Thanks Moster and Innam.
How come they get away with these Hidden NAVs? Thought that a company report must be 100% true. Sad

innam · 5 Re: CFI & CIT Sun Jun 19, 2011 2:27 pm

innam

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Carolis wrote:Thanks Moster and Innam.
How come they get away with these Hidden NAVs? Thought that a company report must be 100% true.

different accounting rules related to classification gives a company certain leeway to move figures around but if you read the annual report you can get an idea of what they own (to a certain extent).

Monster · 6 Re: CFI & CIT Sun Jun 19, 2011 2:59 pm

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wgsaman wrote:OH

Please contribute some thing to the forum in words. If you don't have any thing to write, just read it. Just posting your expression doesn't make any sense.