Hope you are doing good and taking proper precautions.
As you might be aware, besides investing in stocks of good companies for long term wealth creation, another smarter way of making money in stock markets is to participate in Special situation opportunities (SSOs).
SSOs are relatively shorter term (3-4 months) opportunities and based on value unlocking from event-based triggers like de-merger, delisting, buy-back, etc.
The purpose is to park the surplus funds (normally deployed in liquid/short term debt funds) at much better rate of return, though obviously not risk-free.
So, just a few days back we released our New Special Situation stock report and we think you may find the thesis behind the same interesting, as the downside risk is low and there’s reasonable probability of decent gains over the next 3-5 months.
Just to be clear, we are only discussing the thesis because the stock report has been shared only recently with Premium Members and included in the Model Sheet.
New Member/Returning Member
In May’20 we released our New Investment report for Premium Members. It’s a leading cash rich company with dividend yield of more than 15%.
Get access to latest Stock Reports (including May’20), Special Situation Reports and Model Sheet in Premium Memberships
Special Situation Report (Jun’20)
The opportunity we are talking about has the following attributes:
- It’s a delisting based opportunity
- Market cap > 5,000 crore
- Fundamentally strong company with debt free balance sheet on net basis and more than 14% CAGR in sales and profitability over the last 5 years
- Reasonable valuations
- Consistently good dividend pay-out
- Around 2 years back, promoters sold some stake in the company at 40% + premium to the current price
- Now, with a major fall in stock price and depressed valuations, Promoters looking to buy out the stake of public shareholders and take the company private
- Downside risk low as base price is only 10-12% lower and also supported by strong fundamentals
- On the upside, taking cues from the past cases, 30% + is quite possible
Overall, at around current price the risk-reward ratio is in favour of the shareholders and have therefore initiated the opportunity for Premium members.
Wish you good health and wealth.