Algo story
Friendly circles are said to be at work in the Dolat Algotech stock over the last couple of months. Market chatter is that much of the recent interest has been coming from a cartel of Gujarat-based traders. Efforts to draw in retail investors to the party have not yielded fruit so far. In January, the stock had surged with a corresponding spike in trading volumes, but the rally soon fizzled out. Last week again the stock saw a spurt in price and volumes, but there is no buying support appearing at higher levels. Dolat is among the smaller players in the algo trading space but has been consistently making profits every quarter. Valuations appear reasonable at 17 times trailing 12 months, but for a rerating, there has to be a visible improvement in the bottom line.
The Exide story is still going strong. Besides some early bird HNIs, friendly circles are learnt to have a made a killing. Considering that institutional investors had not been biting into the story for a long time, friendly circles decided to take matters into their own hands and put money where their mouth was. Following the tie-up with Hyundia and Kia, the Exide stock has become a big hit with retail investors. After the initial excitement, institutional investors, however, are going slow. After the run-up over the last year, the stock is looking expensive compared to global battery players. Exide bulls, however, are looking to play the India-market-is-different card. For an accumulation exercise to be profitable, the offloading too has to be equally smooth. With the stock in the derivatives ban list, some more short covering can be expected in the near-term. But bulls will need a lot more believers in the story if the price has to sustain recent gains.
Family problems
Breaking from the past, India Inc's younger generation is taking a hands-on approach in managing their family office's investments. Gen Next and even some from the previous generation have been throwing caution to the winds of late and aggressively investing in equity mutual fund schemes. These family offices are sitting on a tidy pile of cash, with some raised from selling their own shares even through buybacks or buyouts, for example. The rising fortunes of companies is also seeing a new crop of family offices of promoters emerge who are steering their newfound wealth to mutual funds.
But the Gen Next's enthusiasm is causing a headache to many chief investment officers at mutual funds, this diarist learnt during a conversation with one such harried CIO. “They say they are willing to take huge risks, despite our warning them not to do that at such elevated market levels,” the CIO said. In addition, the young Turks frequently call up CIOs seeking updates on the market. “We try telling them this is not how investments are managed, but they just won’t listen.” And having written out hefty checks, the corporate honchos feel there is nothing wrong in the CIOs having to be at their beck and call.
Succession planning
The nephew of the Honey-tongued fund manager-turned-ultra HNI held a two-day event on the lines of an investor conference hosted by brokerages, last week. The objective appears to have been to raise the profile of the AMC founded by the nephew. While it has AMC in the name, the fund provides growth capital to start-ups. Uncle Honey ensured that the event was a grand success. If there is something that Honey is known for besides his stock picking skills, it is his strong network in corporate and financial circles. Besides the who-is-who of Dalal Street, also in attendance were a respected banking veteran and some of the well-known companies in the midcap space, Trent for one.
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