05 November 2008

The new investment adviser on the block

Today's Economic Times reports (I of course assume the reporting is accurate) - "The finance ministry has deferred its plan to allow only those companies with 25% minimum public ownership to stay listed, till the stock market comes out of the bearish phase." and "It is understood the government does not want to force promoters to offload in a bearish market as that would further erode investor confidence."

Thank goodness for small (and temporary) mercies...even if it is only to help the promoters rather than the investors.

Another interesting tid bit about the latest investment adviser on the block from the same report:

"A finance ministry study has recently revealed that Q1 and Q2 corporate profits had no relationship with the sharply-lower valuations of blue-chip scrips."

Whoa this is rich, new method of valuation I guess (adjusted discounted cash flow) - note absence of Q3 not to mention expectations. Here is some better advice: Haresh Soneji, Prof. JR Varma and Rahul Bhasin.

And here is the one I've been blogging about for the past two days i.e. the creeping limit generosity for the promoters:

"Implementing this would become difficult without rolling back SEBI’s October 27 decision to allow promoters to buy up to 75% in listed companies through the creeping acquisition route — 5% a year without SEBI approval. When promoters own 75% and institutions maintain their holding at the previous levels, the public would have to be satisfied with less than 25%. The ministry and the regulator would modify the provision, which was introduced only as a temporary crisis management measure, it is learnt. Today, public holds an average of 13% capital in a company although 35% is reserved for them at the public issue stage."

No comments: