How to build confidence?

bullrun · 1 How to build confidence? Thu Jul 12, 2012 7:35 pm

bullrun

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As everybody knows, this dull situation in the market has been prevailed for longer enough periods. Everyone has to do something to improve the market. (Not the manipulation).
Investors should be vigilant and should take wise decisions without going after unknown stocks which have no real value.
Regulators should take action well in advance. Otherwise manipulators or any wrong doers will not be available in the market to be battered with their whip, but only the genuine people would suffer with the repercussion.
Firms too have to take positive steps. Some firms have huge capital as well as revenue reserves. Why can’t they encourage people by offering reasonable bonus issue or with right issue at very lower price?
I will give one example. Find as much as possible it will help you to take buying decisions too.
Think about HHL.
Issued capital is Rs. 1.60 bl
Capital Reserve is Rs. 2.05 bl
Revenuer Reserve is Rs. 7.19 bl
Why can’t they declare at least 1:1 bonus mealy using capital reserves? No one can take Company cash out if they capitalized reserves with Bonus.
Regulators must think about these things too. Every firm must have a dividend policy as well as bonus / right issue policies too. Then the benefit goes to the share holders on running basis. Right or bonus should issue according to the policies and should not according to the decision taken by management time to time as they wish. If clear cut policies are there people will not go after little capital gain so much and will hold shares for long term investment purpose.
This is my feeling. How do you feel?

Slstock · 2 Re: How to build confidence? Thu Jul 12, 2012 8:01 pm

Slstock

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Unfortunately in this market traders will look at Bonus issues and share splits in the same way. If the bonus is 1 to 1 ,in the short term the share price will be halved just like a split.

But yes there is a clear fundamental difference in share split and bonus issues ( capitalization of reserves).

Slstock · 3 Re: How to build confidence? Thu Jul 12, 2012 8:04 pm

Slstock

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BTW, these kind of ideas are very good to boost investor confidence in the management. But they need to look at liquidity factor also. Too many shares at low prices can be bad at times. Look at what happend to RICH , but then again it was a share split.

Redbulls · 4 Re: How to build confidence? Thu Jul 12, 2012 8:05 pm

Redbulls

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slstock wrote:BTW, these kind of ideas are very good to boost investor confidence in the management. But they need to look at liquidity factor also. Too many shares at low prices can be bad at times. Look at what happend to RICH , but then again it was a share split.

You are absolutely right.
Thanks.
For further reading..................
http://www.sharemarketschool.com/how-is-a-bonus-issue-different-from-a-stock-split/

bullrun · 5 Re: How to build confidence? Thu Jul 12, 2012 8:34 pm

bullrun

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slstock wrote:BTW, these kind of ideas are very good to boost investor confidence in the management. But they need to look at liquidity factor also. Too many shares at low prices can be bad at times. Look at what happend to RICH , but then again it was a share split.

my argument is transferring benefits to share holders on regular basis. As we know, when a bonus is declared the market price will increase. But bonus is basically declared based on the past years performance. So, people who hold shares during the period in which the profit was earned should receive the benefit. Otherwise not fare to be accumulated and declare bonus at a latter stage.

Slstock · 6 Re: How to build confidence? Thu Jul 12, 2012 8:57 pm

Slstock

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No issue with your good attempt to bring a valid discussion and companies also transferring benefits to shareholders . All am saying is the quantity and the timing should be crucial to the success of such an attempt. I recall LFIN cap their reserves 1 to 1 when price was around Rs 300. But to day price is around Rs 110.

But again yes , companies should do their best to gain investor confidence in your management and increase shareholder wealth.

bullrun wrote:

slstock wrote:BTW, these kind of ideas are very good to boost investor confidence in the management. But they need to look at liquidity factor also. Too many shares at low prices can be bad at times. Look at what happend to RICH , but then again it was a share split.

my argument is transferring benefits to share holders on regular basis. As we know, when a bonus is declared the market price will increase. But bonus is basically declared based on the past years performance. So, people who hold shares during the period in which the profit was earned should receive the benefit. Otherwise not fare to be accumulated and declare bonus at a latter stage.

bullrun · 7 Re: How to build confidence? Thu Jul 12, 2012 9:59 pm

bullrun

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I recall LFIN cap their reserves 1 to 1 when price was around Rs 300. But to day price is around Rs 110.

The above argument is not sound enough, yo no why? All counters irrespective of bonus paid or not have come down drastically brother.

Slstock · 8 Re: How to build confidence? Thu Jul 12, 2012 10:29 pm

Slstock

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Oh man, I already agreed with you on your concept and good intention. I only said the management needs to be careful about the quantity and timing.

To answer your below argument, you just proved my point. In this market with low mentality even if they introduce a bonus for a solid company the up will be for few days only . It will be marginal as their is less room for internal manipulation. You mentioned "As we know, when a bonus is declared the market price will increase". Well it will be temporary and then the price will start coming down as long as sellers are happy to sell. That what happned tomost companies including LFIN. Now bonus issues might be good for the long term investor with patience. But for short term the timing and quantity of issue matters. That all am saying.

Presume you see my point.
BTW LFIN was just one example. DFCC, LWL ALLI and their were other who faced the same fate. Admit some were overvalued and some were undervalued at the time of the capitalization

bullrun wrote: I recall LFIN cap their reserves 1 to 1 when price was around Rs 300. But to day price is around Rs 110.

The above argument is not sound enough, yo no why? All counters irrespective of bonus paid or not have come down drastically brother.

bullrun · 9 Re: How to build confidence? Thu Jul 12, 2012 10:53 pm

bullrun

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[quote="slstock"]Oh man, I already agreed with you on your concept and good intention. I only said the management needs to be careful about the quantity and timing. .................

OK boss, Let us Cross our fingers. Both of us are at the same direction but in two different vehicles.

Gainer · 10 Re: How to build confidence? Fri Jul 13, 2012 12:20 am

Gainer

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In this market keep eye on highly illiquid stocks possible for split,watch some illiquid stocks AUTO, ASPH, UCAR, PHAR ................

smallville · 11 Re: How to build confidence? Fri Jul 13, 2012 2:48 am

smallville

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Gainer wrote:In this market keep eye on highly illiquid stocks possible for split,watch some illiquid stocks AUTO, ASPH, UCAR, PHAR ................

It may be a fiasco IMO.. U can hold illiquids till we see a bull..

Some stocks you mention were subject to splits (according to you) since many years ago Twisted Evil

VISA · 12 Re: How to build confidence? Fri Jul 13, 2012 6:32 am

VISA

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Best is to offer share buy back on high price this is one way to increase the share price of the company and achive some thing for the company if they have excess large capital . To my knowledge Upto now only CINV and GURD are the only company done the in past.