Makes sense to buy stocks that are FII limit up.
Printed From: The Equity Desk
Category: Market Strategies
Forum Name: Fundamental
Forum Discription: Discuss the operations and finances of any of your companies.Make the other participants aware on the investment opportunities available in a stock on PE free cash flow etc
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=447
Printed Date: 04/May/2025 at 8:50am
Topic: Makes sense to buy stocks that are FII limit up.
Posted By: basant
Subject: Makes sense to buy stocks that are FII limit up.
Date Posted: 04/Oct/2006 at 12:55pm
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It makes sense to buy stocks that are FII limit up! While it is common “smart” belief that investors should avoid companies with very high FII holdings I have personally experienced that some very profitable investments can be made by buying companies with very high FII holdings. The other essential attributes of the stock should be: 1) FII limit hit: There are companies where the FII limit (as regulated by the Govt.) has been hit and no further buying can be made. This indicates that the company is yet to see fair value. When ever a regulation puts a cap of the demand side of a company then the stock tends to be below fair value. Some companies that fall within this space are SBI, http://www.theequitydesk.com/forum/forum_posts.asp?TID=117 - http://www.theequitydesk.com/forum/forum_posts.asp?TID=135 - http://www.theequitydesk.com/forum/forum_posts.asp?TID=29 - 2) The liquidity is low: Low liquidity is a double edged sword. While at first sight it would appear frightful to invest in a company with low liquidity and high FII holding the other side of the argument is equally compelling. No FII would like to get stuck in a low liquidity stock. If the results for a quarter are bad then the stock could be slammed down 50%. So these people would be buying that stock only when they have a longer term view or in other words they would be unfazed by Q-on-Q results. 3) FII limit up in a low market cap stock tells us more about the long term nature of this business then otherwise FII limit up in a small cap stock means that some research has been done unless it is an IFSL (ould know that in hindsight only 4) Now if some one argues that a stock with FII limit up cannot move then consider this. TV 18 has been a 3 bagger since it went FII limit up and Pantaloon, SBI have moved up three fold after having gone FII limit up. 5) And finally we have to do our own diligence merely buying a stock because it is FII limit up makes little (no) sense. I prefer to look at these figures as a passing reference to the analytical process not a guiding one.Interestingly http://www.theequitydesk.com/forum/forum_posts.asp?TID=69 - |
Replies:
Posted By: shuchi
Date Posted: 04/Oct/2006 at 2:05pm
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i agree with your views 100 % |
Posted By: basant
Date Posted: 04/Oct/2006 at 3:08pm
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Thanks Shuchi, Any more small/midcaps with FII limit up that come to your mind. These stocks would not be ten baggers (happens with low FII holdings only) but they do double or quadraple in good time. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: BubbleVision
Date Posted: 04/Oct/2006 at 3:34pm
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we have to do our own diligence merely buying a stock
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Absolutely.... ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: Gorden
Date Posted: 04/Oct/2006 at 4:43pm
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In banking Industry we have Andhra Bank & Karnataka bank. ------------- LIVE FAST DIE YOUNG & HAVE A MARKETABLE CORPSE |
Posted By: investor
Date Posted: 04/Oct/2006 at 10:22am
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Very good point Basant. While we should not use this as a thumbrule for investing, we should defiitely give such news importance and do further analysis. For example, in case of Mcdowell, FIIs probably did not enter because of the poor image of the management(Mallya was sleeping at that time). I entered only because of Ramesh Damani's pointers, and even then i had the same doubt (about very low FII holding) and he told me that not to worry about it, that "FIIs always come in late!". And how right he proved to be  |
Posted By: basant
Date Posted: 04/Oct/2006 at 10:57am
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Yes, Mc Dowell has been one of the bigger feathers in Ramesh ji's cap. He needs to be congratulated as often as we could on that. A very very brave call I would say. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: investor
Date Posted: 04/Oct/2006 at 11:15am
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He actually holds pretty much every liqour stock that is listed(or alteast used to hold it at one time). He entered them when everything was going dead cheap about 3 years ago, and being a true value investor in the Buffet mould, invested on just one angle - compared to global liqour company valuations, the indian liqour companies were going for peanuts. So he bought and waited. The risk, as he kept telling us regularly in his chats, was that "Management needs to deliver / IF Mallya delivers, etc" That was the BIG "if" .... Mallya woke up, started to deliver, and the rest as they say is history... Like you said, Damani definitely needs to be congratulated on his patience and conviction. Two of the most important terms i associate with success in investing - PATIENCE and CONVICTION. You cannot hope to have multibaggers without them, and i have learned that through Mcdowell and Damani. |
Posted By: monu_duggad
Date Posted: 05/Oct/2006 at 7:07pm
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Nice discussion ......was away for 10-15 days..thanks to work related travel and Dussehera holiday...beauty of the forum lies in the way the members come up with nice brilliant threads which brings diverse perspectives on the table !!
Have spent entire day reading various threads of past 8-10 days...:-)) !!!
No one is writing about Mungerilals these days...kulmanjee....kaha ho ? Seems u havent met with mungeri offlate !! With markets at 12400 levels and "new highs" round the corner....am sure u will meet up with lots of them..keep updating us with there conversations !! ------------- If you think you can,You Can |
Posted By: kulman
Date Posted: 05/Oct/2006 at 7:34pm
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Hi Monu jee
Nice to have you back.
Yes, you are right, I have been looking for newer Mungerilals like one would look for value-picks. Will keep you posted soon.
Thanks
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: Gorden
Date Posted: 05/Oct/2006 at 8:26pm
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Some scripts touching upper cap are SBI, PNB, OBC, Bharti tele-ven, Pantaloon retail, BOB, UBI, AMAR remedies, TV 18 & centurion Bank of punjab. Out of these TV 18 & Pentaloon Retails have already been discussed in this forum. Any comments on others especially on Amar remedies. Some scripts which are in caution(about to touch) limit are Indraprastha Gas & Anant Raj Industries. Expert Opinion on any/all of these scripts. ------------- LIVE FAST DIE YOUNG & HAVE A MARKETABLE CORPSE |
Posted By: basant
Date Posted: 05/Oct/2006 at 9:19pm
| Thanks for filling us in on that one. Out of the list we have covered http://www.theequitydesk.com/forum/forum_posts.asp?TID=135 - http://www.theequitydesk.com/forum/forum_posts.asp?TID=29 - http://www.theequitydesk.com/forum/forum_posts.asp?TID=221 - http://www.theequitydesk.com/forum/forum_posts.asp?TID=249 - |
Posted By: kaizenbudhi
Date Posted: 01/Jul/2007 at 1:39am
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Basantji,
Educomp recently hit the ceiling and then I think they got approval for increase to 100%. Also, Micro tech & Venus Remedies are increasing it to 49%. It happened with Prajay in mid 2006.
Should one be tracking a) if the ceiling has reached or ii) company anouncing the increasing of celing c) or both?
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Posted By: xbox
Date Posted: 01/Jul/2007 at 5:40am
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FII limit expansion could be a supporting factor for investors but not the sole factor.
Remember FIIs are ready to risk much more money than us. FIIs are biggest manipulators of the world. I know many but just to complete the context I give you one small example...
Suppose one FII picked 100 shares at 10 ruppes 2 years back. Now price of current price is 30 and same FII does 10 shares of FCCB at 50. Price starts moving up because of very high FCCB price but in this process value of original shares also rises, which he/she sells in the momentum at very high price (this price was created by high FCCB price only). Even if FII is in loss for FCCB alloted shares, he/she is happy becoz he/she made super profit in original shares. Also if company's business model is solid, in that case he/she will make money in FCCB alloted shares as well.
All in all, in markets it is very easy to get fool, if one is looking at others. As Basant jee always says...dikhawe pe mat jao, apni akal lagao.
<<Serious note>> This message is simply ignorabale. ------------- Don't bet on pig after all bull & bear in circle. |
Posted By: basant
Date Posted: 01/Jul/2007 at 9:18am
This FII holding concept is secondary. remember they also held on to dudds like HFCL and IFSL so the company comes first. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |