- Wealth PMS (50L+)
We’ve had some very interesting experimentals in 2020, and we have a great start in 2021 in closing three experimentals with a reasonable profit, in the first week!
We got into the trade for the buyback at below Rs. 350 per share, after the approval and record date was approved. (December 11 was the record date, and we proposed that people buy the share on 20th October, when the price was around 347) The buyback was at Rs. 400 and we were to tender between end-December and early January.
We exited on the 6th of January 2021, when the price went beyond Rs. 400 – so our exit was recorded at Rs. 408.
This is a profit of Rs. 61 per share. We recommended about 288 shares, so the profit is about Rs. 17,500 per share.
Investment: Rs. 100,000 .
See Post on TCS for reference: Click here.
At the same time as Wipro, in fact on the same date, we mentioned a trade for TCS’s buyback. We were to buy at Rs. 2730 and tender for the buyback which was at Rs. 3,000. The idea was to buy 73 shares (roughly worth Rs. 2 lakh or less)
This was tendered in December 2020, and all shares were accepted for everyone below Rs. 2 lakh. (See Post Buyback Announcement)
The profit is Rs. 19,710 for an investment of Rs. 200,000. This is 9.9% in two months.
Post for reference: Click here.
Majesco as a company has sold nearly all its assets and had Rs. 1000+ per share in cash. It was to pay most of this as a dividend, when we suggested a trade to:
The first two steps are complete. A dividend of Rs. 974 per share was received. We haven’t yet done the last part – of selling the remaining shares – because there’s a lot more value in there, and there’s a daily upper circuit.
Calculations: They have about 2.85 cr. shares outstanding, and around 100+ cr. in cash remaining. That’s about Rs. 34 per share in cash, plus a building that they plan to sell. In all, the company has no other operations, so the value per share should be around Rs. 30 remaining. We’ll wait for the price to come closer to that level and sell.
However, this was only useful for someone who isn’t in the taxable brackets. Since dividends are taxed, it makes no sense to buy at 935 and then pay taxes at 30% on a Rs. 974 dividend.
Returns: Since Rs. 974 has been received and the share price is about Rs. 20 now, we have a return of 6% in one month. This again, isn’t too bad. Especially when we knew the risks and the trade didn’t have very heavy uncertainty.
There was no limit to doing this other than the Rs. 500,000 limit beyond which tax slabs start. For an investment of Rs. 500,000, this would have generated Rs. 30,000 or so in a month.
Refer: Our post on The Majesco Opportunity.
Experimentals are interesting short term or out-of-the-ordinary trades you can get access to in #actionable on Slack and on the dashboard at https://app.capitalmind.in/experimentals/ . They may not always exist but there’s some that will come in from time to time. Subscribe now to learn about how they work, and to take advantage of opportunities as they arise.