Bizarre and brazen moves are common on the penny stock side of the stock exchanges. Vikas Proppant and Granite Ltd just released this intimation, announcing en-masse resignation of the entire management and board of the company to "bring in professional management". (1/7)
The shares of this company were heavily manipulated in the last 2 years, following the typical pattern of operators hand-in-hand with enabling management. Here's a look at the stock chart. Take a look at the volumes before the rise and the volume of trapped retailers after. (2/7)
Company has had almost no revenue in the last 3-4 years, except for a brief blip in 2019 when the stock prices also went up 6-8x in a very short span of time. In fact, it has been selling fixed assets this year. (3/7)
There's this hilarious announcement in January 2021, attempting to pump the stock based on "personal" visit by promoter to operation site, and use of heavy jargon for what is essentially mining rock out of the ground. (4/7)
Here's another announcement in July 2020 talking about 'share grabbing' and invitation to shareholders (hand-picked by management) for a site visit and personal chat with the erstwhile MD. (5/7)
Interesting to note that the previous MD, B.D. Aggarwal, passed away in September 2020. Quite likely the shenanigans started earlier during his tenure, and now the rest of the promoter group finally caught up and decided to exit the ship that was worse than sunk. (6/7)
While the utility of this analysis is minimal at best, it does serve as a useful reference point to recognize stock pumping. With experience, such manipulations are easy to spot even while they're taking place. The real game, of course, is spotting the sophisticated ones ;) (7/7)

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More from @leading_nowhere

25 Jun
Whenever you consume content and need to draw conclusions from it, refer to Carl Sagan's Baloney Detection Kit. Twelve simple logical fallacies to watch. If you spot these, you are asking the right questions.

Full piece linked at the end👇 (1/13)
(1) ad hominem—Latin for “to the man,” attacking the arguer and not the argument (e.g., The Reverend Dr. Smith is a known religious fundamentalist, so her objections to evolution need not be taken seriously); (2/13)
(2) argument from authority (e.g., Nixon should be re-elected because he has a secret plan to end war in Asia—but because it was secret, there was no way for electorate to evaluate on merits; the argument amounted to trusting because he was President: a mistake); (3/13)
Read 14 tweets
17 Jun
Bull runs in small caps are usually fast and furious, and the cycle repeats itself every 3-4 years. Every time, retail is sold stories of business turnaround and stock charts look fantastic for meteoric wealth creation. For the class of 2020-21, here's a couple of past stars.
These small cap stocks with 30-40 crore market cap went up 23X and 11x in a span of 24 months between April 16 and April 18. The story looked great then, but subsequently once liquidity and interest disappeared, the prices went right back to where they came from.
When in the thick of the action, it can be difficult to keep a level mindset. To keep the narrative believable, these companies are able to massage their top-line and bottom-line for a short period of time to show an imminent turnaround. Note the trends in these financials.
Read 11 tweets
12 Jun
Some thoughts on the PNB Housing Finance (PNBHF) drama around raising INR 4000 crore via preferential issue and ceding management control to Carlyle PE.
On 31 May 21, PNBHF board approved fundraise via preferential issue of shares worth INR 4000 crore to Carlyle PE, General Atlantic and Salisbury Investments (Aditya Puri). The price was fixed at INR 390 per share, INR 6 above the floor under the SEBI ICD regulations. (1/n)
The share capital of PNBHF will increase from 16.82 crore equity shares of INR 10 each, to 27 crore equity shares of INR 10 each. Simple math - 39% dilution on the existing share capital base. That is a huge dilution for promoters and minority shareholders. (2/n)
Read 26 tweets
9 Jun
Decoding the SEBI order against Franklin Templeton (FT). Quoted verbatim, "a fall out of the obsession to run high yield strategies without due regard from concomitant risk".

A thread 👇
FT’s recent issues with its debt schemes are widely known. In this thread, I distill the SEBI order dated 07 June 2021 against Franklin Templeton and outline the primary (alleged) misdemeanours by FT. Find the order here:… (1/n)
Setting the tone of this topic is this statement by the SEBI in its concluding paragraphs. Obsession with yield, strange dealings with debt issuers and complete lack of risk management. The whole nine yards. (2/n)
Read 29 tweets
31 May
The anatomy of Private Equity (PE) funding in a public listed company.

A thread 👇 (1/n)
PG Electroplast Limited, a contract manufacturer of various kinds of electrical goods and appliances, recently announced an 80 crore fund-raise through preferential allotment of equity shares and compulsorily convertible debentures (CCD) to Baring PE and family funds. (2/n)
Such transactions are a great way to understand Private Equity deals in a public setting. Because of disclosure norms for listed companies, everything related to a fund infusion in a listed company is made available to the public. (3/n)
Read 40 tweets

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