The last few days for investors in CEBBCO has been traumatic. The stock has literally tanked and is now close to 60 levels. On Friday, it was down nearly 20%. So, overall in a matter of a few weeks, the stock is down nearly 40% (from around 100 levels to 60).
The question in everyone's mind is what should we do now. There are 3 things one can do now -- there are always only these 3 things one can do ;-).
1) Buy more
2) Sell and get out
3) Hold and watch!!
Personally, I am a bit perplexed at the steep 20% fall on Friday. The results that the company announced was reasonable. Net Sales has gone up y-o-y; so has net profit & EPS.
The only negative news that has come out is the pledging of shares by the management. The percentage of shares pledged is fairly low (around 2% of total outstanding shares), so that too should not be a big deal. Unless, insiders know something that we retail investors don't - things like corporate governance issues - there may not be a fundamental case for such a dramatic fall in prices.
So, in this case, I am planning to hold on to my shares - just wait and watch to see further developments. The stock is fairly close to its 52 week low so there may be some buying around these levels (I doubt it though, given he steep fall last week).
The question in everyone's mind is what should we do now. There are 3 things one can do now -- there are always only these 3 things one can do ;-).
1) Buy more
2) Sell and get out
3) Hold and watch!!
Personally, I am a bit perplexed at the steep 20% fall on Friday. The results that the company announced was reasonable. Net Sales has gone up y-o-y; so has net profit & EPS.
The only negative news that has come out is the pledging of shares by the management. The percentage of shares pledged is fairly low (around 2% of total outstanding shares), so that too should not be a big deal. Unless, insiders know something that we retail investors don't - things like corporate governance issues - there may not be a fundamental case for such a dramatic fall in prices.
So, in this case, I am planning to hold on to my shares - just wait and watch to see further developments. The stock is fairly close to its 52 week low so there may be some buying around these levels (I doubt it though, given he steep fall last week).
It is possible that a liquidity event is forcing a large holder to sell on the screen.
ReplyDeletePossible. It could also be insider selling based on some upcoming development. Nothing in the results suggests such a drastic fall.
ReplyDeleteDear Abhishek,
ReplyDeleteCan u please give your view as contrarion on opto circuits
Dear Kishor
DeleteOpto has a lot of issues with its debt. It will take a fairly long time to get the cashflows going and get the debt back to acceptable levels. Till then it will be difficult for the stock to do well. I would keep away for atleast 2-3 quarters, but definitely keep my eyes open for major price corrections.
Open CEBBCO on Google Finance and see the competitors (including global) in the bottom half of the page and look at their P/B. Even with the recent steep fall, CEBBO is trading at P/B of 1.27 while several big names, including Toyota Body are valued at P/B < 1.
ReplyDeleteYour original post also mentioned that CEBBCO had no moat and had -ve cash flows for 3 years, and chequered EPS.
This means CEBBCO was overvalued in the first place. It is not necessarily a good buy now. Those interested should wait for a a true margin of safety.
20.87% of the capital has been pledged by Kailash Gupta :
ReplyDeleteDownload pdf -
http://www.bseindia.com/corporates/anndet_new.aspx?newsid=230c616f-bf79-4a75-87ab-8b47594fe2d4
Guys any latest update on CEBBCO? looks like it lost many clients in recent times.
ReplyDeleteHi Ramesh,
DeleteI had booked losses and moved on. I don't track it anymore.