Equity / Stocks - Pledging of shares and Impact on shares in MARKETS - Hi Mani,
I see when promoters pledge their shares, share price starts falling rapidly, how can we avoid this kind ...
I see when promoters pledge their shares, share price starts falling rapidly, how can we avoid this kind shares, and I always read that select stocks with good management, but we can read the information which publicly open, sometimes we may not know what is happening inside, how can we identify a stock or company with better management.
yes, promoter stake pledged is a total danger stock for retail investor ... Mostly, because the promoters know when there is false valuation in stock market and make use of that fact to pledge their shares at high undeserving valuations to banks and take loans ...
I made a video on how to check promoter holding ... watch the video below,
Unfortunately we need to track all companies we invest for promoter stake and whether its pledged ...
Management is nothing but a bunch of human beings. We cannot directly judge them. So, we can only judge by the products and services offered by the company. Which is why, knowing the products / services of a company as a customer is key for an investor ...
For example, Maggi noodles was very popular even in 90's and Nestle is a great company and has given its investor huge returns in the last 15 years .... The same goes for "Good Night" mosquito repellent product by Godrej Consumer ... Private banks that we know of and so on ...
We cannot have been a customer of Infosys. But, we could have had friends who were employees of Infosys. Bulk of our portfolio needs to be companies, which we know for sure and have tasted their products and services
We can have a few companies, which we cannot be customers of, but are clean in numbers and have good track record ...
Mani, I see Crompton Greaves's promotors also pledged nearly 68% their holdings, but impact was low when compared to Gitanjali Gems or other stocks, is it the brand name that actually making such difference ?
Mani, I see Crompton Greaves's promotors also pledged nearly 68% their holdings, but impact was low when compared to Gitanjali Gems or other stocks, is it the brand name that actually making such difference ?
ya, sometimes brand value does play a bit of an impact ... And only the HNI's and others would have clearer reports on what exactly happens inside the company ....
For a Retail investor, investing in promoter pledged company is always suicidal ... Its better to stick to clean companies
Below link from moneycontrol is a pretty good report to track list of promoter pledged companies ... I think they update every quarter, or as soon as they get updates from the exchange
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