IPO Trading Updates

We have now sold all our IPO Holdings in Career Point, Eros International, Techpro Systems, VA Tech Wabag & Oberoi.

During last one month, I have made some tough calls in order to efficiently utilize the Capital for maximum gains. It was difficult, for example, to choose between Career Point, Eros & Microsec Finance. I decided to go with Career Point & Eros. Came out at Break even on Eros & booked decent profit in Career Point. Similarly, skipping Ashoka Buildcon & going for Tecpro System was difficult

In case of Oberoi, almost every analyst felt that issue was priced bit high at the upper hand. Knowing Oberoi's construction quality, I sensed they deserve a little bit of premium. While the Retail quota was subscribed just about 1 time, the Institutional Investors gave a good response. While it shows a modest 10-12% Gain, the allotment for Retail was 100% & hence we could book substantial profit here. Lucky me :)

Here is the approach I normally follow for IPO Trading:

1. Study the DRHP
2. Look at Analyst's comments - Source : Money Control & The Economic Times
3. Look at Retail Inventors Enthusiasm. Source : Money Control
4. Look at Grey Market Premium. Source : http://www.premiuminvestments.in/ or http://www.smartinvestment.in/
   
5. Look at earning consistency, quality of management, peer comparison etc. Management quality is the factor I find most difficult to assess.
   
6. Look for Margin of Safety. So best to avoid issues showing Rs. 5-10 premium
   
7. Apply maximum quantity from all accounts in the Family
8. Sell at least 2/3 Quantity upon listing.

I have included a quick analysis of IPO Trading in 2010 so far. With markets inching up, this is of course not with myself alone. Every investor who has invested in last few months with a reasonable care, had made money.

I could have of course improved the realization further but as I said before, as a principle, I do not trade during office hours. That leaves me with a limited flexibility & I have no issues with that.