Salman, when an investor invests in a stock he would have his own investment thesis backing his investment decision. Some investors make their thesis public for academic interest (of course after they initiate their position) while some prefer to be silent about it.
Having said that, if one were to guess why RJ would have picked up the stock the following may be few reasons..
Backed by a strong mandate, it appears that the new government is likely to fuel of a massive capital expenditure cycle. The capex will be across industries - infrastructure, hospatality, health care, power, energy etc. Now if capital has to flow in this scale, it has to take different forms within the capital structure - equity, debt, structured products, external borrowing etc.
Now an obvious beneficiary of this overwhelming capex cycle would be a well capitalized financial intermediary. RJ may have perceived Edelweiss to be one such company.
So my guess is RJ and co convinced with the macro story would have zeroed in on Edelweiss..they would have done a through due diligence or it may simply be a phone chat with the right person within the company to get the required investment confidence.
Of course all this is my guess, the real story could well be something else!
Like they say, your guess is as good as mine :-)
**** Please note - I'm not trying to advocate an investment in the company. I'm just trying to illustrate a framework based on which investors build an investment thesis. The details I have put in here is a classic case of a top down approch...i.e you start with a macro story and identify a comany which is well positioned to capitalise the macro trend****
Question is why did it make headlines? Everyday Fiis and Diis buy and sell lots of shares but there is no news about it. Even he would be buying and selling other scripts which don’t make headlines.
Just google for such headlines in past and see what happened to those scripts immediately after the news and what happened over a period of time. e.g A2ZMaintenance.
Would suggest read “Reminiscences Of A Stock Operator” by Lefevre, Edwin. Its a nice book about Jesse Livermore.
Ajay -His day to day trading action is never revealed for obvious reasons but any change he does with his core portfolio is made public…so much so that money control has a special page dedicated to his portfolio. Before this purchase he bought HT media last month or so and that was also public knowledge. You cant really point out to A2Z or any other stock in specific because some of them have rallied and some have not…it is quite random. Media anyway glorifies his investment positions…dont think we should over analyse this stuff.
Hi Ajay, thanks for your response, interesting point… have never thought about it that way… but yeah, he is our most celebrated trading hero… so guess there is alot of curiosity attached with his moves. Yes love the book!! :-)… tried to be a ‘boy plunger’, but didnt really work so well for me
Hi Salman, I wasn’t referring to the boy plunger part of the book … wouldn’t advice anyone. I was referring to the later part of the book specifically chapter 22. Anyways here are some additional interesting facts -
-On the same day FII - GPC Mauritius sold off around 3 crores of this stock.
-One 5th of June the same FII had sold off around 1 crores of stock.
-Till April of this year, this stock had hardly ever exceeded 50K volume - NSE BSE combined.
-In April May avg volume was around 5 lac.
-In such a thinly traded script FII was able to off load their stuff without adversely impacting the price.
Yeah from the May election onwards it’s been having a really good uptrend and has most doubled it’s share value, a possible turn around. for the company?.. Perhaps RK see’s a Multibagger potential in this one.
Yeah may be. Any ways I would clarify once more, I have not tried to analyze why RJ bought this which I am in no capacity to do and I think ethically would be wrong on my side to try and judge some one else’s action.
