Team-BHP - Do you play the stock market

The Satyam stock has the potential to turn into junk in no time. No one knows what all will come up in the near future. Of course it can soar high too with the right kind of leadership but there are too many ifs and buts involved in that.
I would take my profit at the first available opportunity and quit the counter as soon as possible.
Somehow I don't like the way L&T is showing so much interest in the company. I have a hunch there is something bigger happening behind the scenes on this front and what is coming out in the media is just bull's excreta to divert public attention.
It's just a hunch though. I have nothing concrete to back up what I am saying. I am beginning to feel uncomfortable about the L&T top management of late.

Quote:

Originally Posted by appuchan (Post 1149645)

True. Neither do I have any medium/long term confidence in Satyam. I never bought its stocks even before the scam. But then I have already recovered my money today morning @55 by selling one-third of the stocks.

I agree @ appuchan & Sudipto-S-Team. I never invested in Satyam before as it never inspired the required confidence in me. However the recent volatility provides a great opportunity.

I started with buying call options after the scam broke and the scrip hit the Rs.30/- level. . They have yeilded some profit. I moved into cash segment (shares) after the exchanges stopped options in satyam. In the meanwhile. I shorted the stock about 10 days ago at Rs. 22 and covered it when it reached 18. Since then, I have bought the scrip between 29 and 18. Offloaded it at 56 yesterday and have bought it back at 45!

All said and done, I dont think the government(s) have any intention of letting satyam die, so no chances of it becoming junk just yet. I will continue to play the scrip as long as it is priced below Rs.100.

Cheers.

Quote:

Originally Posted by Sudipto-S-Team (Post 1149335)

Somehow I don't like the way L&T is showing so much interest in the company.

I am beginning to feel uncomfortable about the L&T top management of late.

Look at the irony of situations.

Satyam - suddenly tries to venture into infrastructure and realty. Reason given at that time was uncertain future of IT business in the long run, and to safegaurd the company by diversifying into infrastructure which is a great opportunity in India. They decide to do this in a least transparent manner without informing share holders.

L&T - Bluest of blue chip. MNC infrastructure company with thousands of crores of orders to build roads and power plants. Suddenly they try to venture into IT. They invest crores of share holders money and walk into Satyam blindly without knowing what is it getting into.

If Satyam is tainted for corporate governance issues, L&T is equally tainted for same reason.

PS: It has become extremely difficult to earn from the markets and I am making money only by getting IN and OUT of "taints" like Satyam, United Spirits, Educomp, Rolta, Unitech etc :)

Today's Business Standard has a wonderful editorial page article by Shobhna Subramaniam on the precise subject of L&T's sudden interest in Satyam and the way they are trying to gain control. The article talks about whether it is ethical on the part of the L&T management to spend so much money without their shareholders' approval.

We must remember that managements of companies like L&T or ITC (that is, companies that were originally promoted by foreign companies but now the foreign holding is low) are totally at the mercy of the domestic financial institutions like LIC, GIC, UTI etc who hold a lot of shares and can make or break a management through their voting rights.

If LIC, GIC and UTI (read government of India) aren't happy it will be holiday for Mr Naik.

I have a hunch that they are putting pressure on L&T to do this. I think it's time to quit/exit L&T also.

Quote:

Originally Posted by Sudipto-S-Team (Post 1150930)

This mornings papers also have references to a total of 7 corporations eyeing Satyam. The editorials in the papers about L&T taking the approval of minority shareholders into confidence have been appearing for some time and perhaps do make a point that is valid to some extent. I do not know whether LIC, GIC, UTI etc. have put pressure on L&T to pick up the additional stake last week, but the move definitely seems to have some support from the Govt. in as much as Mr. Naik was in Delhi and met senior functionaries before L&T bought the additional 6-7%.

I do not know whether this is good for L&T or not but it is definitely good for Satyam.

Lets wait and see the drama unfold.

Cheers & happy hunting.

Quote:

Originally Posted by BomBatt (Post 1150090)

If Satyam is tainted for corporate governance issues, L&T is equally tainted for same reason.

Just curious - why do you say L & T is tainted?

Simply adding one more field of business is not bad corporate governance. But buying something for 5 rupees and then selling a company of which you are a director for Rs. 10/- is bad corporate governance.

Quote:

Originally Posted by BomBatt (Post 1151394)

May not be tainted in that sense. Check out this interview CNBC TV 18 did with an analyst and you can draw your own conclusion...

L&T's Satyam stake buy lacks transparency: Ajay Srivastava

That guys needs to learn some basics about L & T. I will NOT classify L & T as an infrastructure company. I would rather call it a diversified engineering conglomerate. They used to have 6 or 7 independent groups, and there was once a proposal to spin off each group into a separate subsidiary. Thankfully, better sense prevailed.

Given the current information available in the media, I would rather buy the official explanation that the original purchase was a normal investment decision. I 100% accept the L&T part of teh story so far.

Apparently, the Raju CONfession came the next day, and it is the subsequent turn of events which have me very unhappy. This is, for me, more a borderline case between shrewd and unethical business practice. I can understadn businessess acting contrary to public posturing - like L&T's public statement that they will neither buy nor sell any more Satyam shares, and then raising their stake to two digit figures.

Whether this is a question of mere ethics or business tactics, is something we have to wait and watch.

How much has L&T invested in Satyam, in terms of a % as Satyam's cash surplus? If this is a small figure, I will treat this as an issue of business ethics / tactics. Else, there is a transparency issue at L & T too.

Corporate Gonvernance? It is a hesitant no from me.