Who is the Biggest Beneficiary of Reliance Buy Back?
Sunday, January 22, 2012
Who is the Biggest Beneficiary of Reliance Buy Back?
Greetings from Hitesh! I thank you for the response I have received for my last article. Let us see the facts before we decide the answer of the above questions.
What Reliance Has Said?
It has also share buyback of Rs 10,440 cr at maximum price up to Rs 870/sh which is at 10% premium to today's closing price. RIL will buyback up to 12 cr shares or 3.6% equity via open-market.
What it means?
1. The company will buy shares from open market and not from you.
2. Upper limit for buy back price is Rs.870. It means the upside of the shares price is also capped.
3. Company will buy just 3.6% shares…for every 100 shares….they will buy just 3.6 shares from open market.
Let us see the implications to the investors.
Long Term Investors:-
If you are holding shares bought before 2004….you cost will be less than Rs.250. Thanks to your good luck the price went upto Rs.3000 in 2007 only….12 times money in less than 5 years….but most media analysts were talking about 5500-6000 price at that time…so very few would have sold !! I know many of you might be regretting your decision to hold.
If you have bought shares in early 2006 around 1150….you also got an opportunity to sell at 3000 in just 2 years. I am sure very few would have sold at that time. However, because of the bonus in 2009….your cost of holding would be around Rs.550/600. So, if you sell at Rs.870….you are making profit of Rs.250-300 in six years!!
Thanks to media, many investors would have bought shares around Rs.2500 to Rs.2800 in 2007 for a target of Rs.5500 to Rs.6000….their average price after bonus would be Rs.1200 to Rs.1400…They are in loss.
Short Term Traders:-
The only person who will benefit instantly…are the person who have bought the shares after 25th Dec.,2011. They will get close to 15% to 20% at Rs.870 in just a month’s time. How many of you have bought? In last email I had categorically said that I have not bought or recommended shares from 2009 to 2011.
But we had initiated a buy to our subscribers at Rs.715 on 3rd January….If they have bought, they will surely make 15% to 20% in a month’s time.
Can you call this step as an investor friendly?
From their transfer records, company knows that you have not made money…..so they gave you a bonus in 2009 and now a buy back. But from the above facts, it is clear that after bonus and buy back also….most of you are in loss.
From the last two years…company has given Rs.8 as dividend and the total amount of dividend was Rs.2400 Crs for the year 2011.
As we have seen above….due to your cost and open market buyback…you will not benefit….however, if the company has distributed Rs.10000 Crs. as special dividend…you all would have got Rs.30 per share TAX FREE !! You all would have got something. But the company does not want to give you Rs.30 !!
My Personal Call:-
From the above facts, I can conclude that you have got only one thing….and that is excitement / frustration. Please ask following questions to yourself….
1. Did you invest for excitement or frustration?
2. If you invest for making money, then why did you not sell at 3000/2500 or even at 2000?
3. What should you do now? I know you will ask / listen to 5-10 advisors…..but that is not going to solve your problem.
4. As long as you invest or take investment advice with emotions of Greed / Fear / Hope or Euphoria….I am sure, you will repeat your investment experiences….just name of the companies will change.
Special Message to my readers:-
We are about to close our special subscription scheme…..if you still want to wait….it is your choice. But if you realize that you are missing the once in a life time opportunity…please write or call me
Live With Passion…Invest With Passion.
Hitesh Parikh.
Cell:- 98694 25399.
P/S:- Please visit our blog for previous emails.. http://bestofhiteshparikh.blogspot.com.
Who is the Biggest Beneficiary of Reliance Buy Back?
Greetings from Hitesh! I thank you for the response I have received for my last article. Let us see the facts before we decide the answer of the above questions.
What Reliance Has Said?
It has also share buyback of Rs 10,440 cr at maximum price up to Rs 870/sh which is at 10% premium to today's closing price. RIL will buyback up to 12 cr shares or 3.6% equity via open-market.
What it means?
1. The company will buy shares from open market and not from you.
2. Upper limit for buy back price is Rs.870. It means the upside of the shares price is also capped.
3. Company will buy just 3.6% shares…for every 100 shares….they will buy just 3.6 shares from open market.
Let us see the implications to the investors.
Long Term Investors:-
If you are holding shares bought before 2004….you cost will be less than Rs.250. Thanks to your good luck the price went upto Rs.3000 in 2007 only….12 times money in less than 5 years….but most media analysts were talking about 5500-6000 price at that time…so very few would have sold !! I know many of you might be regretting your decision to hold.
If you have bought shares in early 2006 around 1150….you also got an opportunity to sell at 3000 in just 2 years. I am sure very few would have sold at that time. However, because of the bonus in 2009….your cost of holding would be around Rs.550/600. So, if you sell at Rs.870….you are making profit of Rs.250-300 in six years!!
Thanks to media, many investors would have bought shares around Rs.2500 to Rs.2800 in 2007 for a target of Rs.5500 to Rs.6000….their average price after bonus would be Rs.1200 to Rs.1400…They are in loss.
Short Term Traders:-
The only person who will benefit instantly…are the person who have bought the shares after 25th Dec.,2011. They will get close to 15% to 20% at Rs.870 in just a month’s time. How many of you have bought? In last email I had categorically said that I have not bought or recommended shares from 2009 to 2011.
But we had initiated a buy to our subscribers at Rs.715 on 3rd January….If they have bought, they will surely make 15% to 20% in a month’s time.
Can you call this step as an investor friendly?
From their transfer records, company knows that you have not made money…..so they gave you a bonus in 2009 and now a buy back. But from the above facts, it is clear that after bonus and buy back also….most of you are in loss.
From the last two years…company has given Rs.8 as dividend and the total amount of dividend was Rs.2400 Crs for the year 2011.
As we have seen above….due to your cost and open market buyback…you will not benefit….however, if the company has distributed Rs.10000 Crs. as special dividend…you all would have got Rs.30 per share TAX FREE !! You all would have got something. But the company does not want to give you Rs.30 !!
My Personal Call:-
From the above facts, I can conclude that you have got only one thing….and that is excitement / frustration. Please ask following questions to yourself….
1. Did you invest for excitement or frustration?
2. If you invest for making money, then why did you not sell at 3000/2500 or even at 2000?
3. What should you do now? I know you will ask / listen to 5-10 advisors…..but that is not going to solve your problem.
4. As long as you invest or take investment advice with emotions of Greed / Fear / Hope or Euphoria….I am sure, you will repeat your investment experiences….just name of the companies will change.
Special Message to my readers:-
We are about to close our special subscription scheme…..if you still want to wait….it is your choice. But if you realize that you are missing the once in a life time opportunity…please write or call me
Live With Passion…Invest With Passion.
Hitesh Parikh.
Cell:- 98694 25399.
P/S:- Please visit our blog for previous emails.. http://bestofhiteshparikh.blogspot.com.
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