Long ago I had posted about my mistakes…let me again write about some recent mistakes. Some are so fundamentally wrong after spending so much time in the market that one keeps wondering why such mistakes happen..

There were 3 companies that I was tracking – I have a position in just one of them – and constantly have a trading position in all 3.

When Cholamandalam, LnT Finance, and JM Financial – and specifically was tracking them for the RBI’s much awaited banking licence. I have no clue what the market thought about the status of their applications (if any – no proof of whether Chola was intersted in a banking license).

When the names were announced, L&T Finance was at 82+, Chola was at 270 and JM was at 26-7.

I thought the would all fall – by at least 15% – as an immediate reaction to the RBI announcement. Well nothing happened. L&TF is today looking weak at 64, Chola looking STRONG at 298 and JM at about 28 is moving sideways.

Luckily I had NO TRADING POSITION in any of them, so there was no financial loss. However assuming that I took my view seriously and GONE SHORT in all the 3, chances are I would have lost money, not gained money.

The other power on which I gave a sell call was Tata Power at 85-6. Logic? When people see new shares in their portfolios – the right shares would be listed soon (if not already done).

Well the share is at 78 as I write this.

I wish I had gone short at 85.

Why did I not short Tata Power? Why did I not sell of the TP in my core portfolio?

Greed I guess. I had put a sell at 87 – but did not go and push my broker to sell at any price….

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  1. ulip is a mistake – because when the fund manager changes IF YOU NEED LIFE INSURANCE you cannot throw away the policy. For me that was not a constraint. Also i am a direct equities guy, so fund managers mistakes hurt me more 🙂 But no prima facie not a mistake.

  2. Subraji, I guess you may write another post after few months for missing NTPC available at around multi year low with decent Dividend yield and Good installed capacity. 🙂

  3. NTPC is a different game all-together. In India every one needs power, no-body wants to pay for it. NTPC has to take permission from Supreme court to disconnect power to BSES. How on earth do you believe that this company can make money for you ?

  4. NTPC is a great stock available now at wonderful price. The kind of infrastructure/plant/equipment it has, it deserves to have much greater valuation. Alas, our Govt considers it as charity organization but not a corporate entity. With recent CERC order, it profits would dent. It needs a huge capital to complete the on-going projects. Govt is milking it’s corpus through higher dividends. Electricity boards do not pay the dues. Coal supply issues and govt would not allow to increase the unit rates for vote bank politics. It may go up here and there 110 to 200, I won’t see it crossing 200 for many coming years.

  5. It is not completely true. Trade receivables are not bad and it is getting its payment. But the issue is, NTPC is allowed for Spot market pricing like other private Utility companies. hence, the margins are not great, but it makes PPA and getting fixed rates of margin for many years. Coal supply is also better for NTPC compare to rest. now it got allocation in coal blocks which has considerable reserve which can be expected by end of this fin year. so Margins will be improved on operational front by next year. for 43GW installed capcity, Company is available at 95K crs which is roughly 2.2 cr per MW. 1MW installation cost at this moment is 4-5Cr. So it is available very cheap due to short term hiccups. Globally above 10% ROE is great for utility companies.
    it is really great contra buy.

  6. NTPC is a great stock, not a great company to own. I do have some PSU’s in my portfolio but generally abstain from power sector including TATA POWER.

  7. I have my friends as ASST. managers in NTPC. Some are resigning as they think that their precious years are getting wasted by doing nothing !!!. In my opinion all other fundamental/Technical analysis cones after the perception of the company. NTPC was created for public service that didn’t include creating value for it’s shareholders.

  8. kindly read as below.
    But the issue is, NTPC is NOT allowed for Spot market pricing like other private Utility companies. hence, the margins are not great, but it makes PPA and getting fixed rates of margin for many years.

  9. Agreed. But the purchasing value of fixed rates gets reduced due to inflation. Also there is a huge pay hike in form of pay-commission from 2016.

    But one may buy in current levels and sell in a rally purely as a trading strategy.

  10. They are allowed to pass on costs to customer though PPA is signed.
    Certainly on long run, it is going to be cool stock to own. Deregulation of PSU will certainly help them. but it needs time.
    Patience pays. I am biased due to i have vested interest.

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