Street signs: Buyback play in HEG, Pabrai turns cautious on CARE, and more

Buyback play in HEG

Graphite company HEG will soon launch a Rs 7.5-billion  buyback of 1.36 million shares at Rs 5,500 apiece, a premium of 40 per cent to the current market price of Rs 3,890. While the buyback price is attractive, analysts sound caution for investors wanting to play the arbitrage game. A total of 204,545 shares are reserved for retail investors in the buyback, but brokerages estimate the acceptance ratio to be between 30 per cent and 40 per cent. “Given the attractive buyback price, existing retail investors should definitely tender shares in the buyback. However, fresh bets to pocket the difference between current price and buyback price may not work, given the low acceptance ratio,” said an analyst. 

Samie Modak

Pabrai turns cautious on CARE

The Pabrai Investment Funds last week sold shares worth Rs 820 million of CARE Ratings in separate bulk deals at Rs 985 a share. The transaction indicates a cautious view by ace investor Mohnish Pabrai, who is the founder and managing partner of The Pabrai Investment Funds. In September, the fund had bought Rs 620 million worth of shares of CARE at Rs 1,225. Shares of most rating agencies have come under pressure following the IL&FS fiasco on worries that slowdown in bond issuances might impact demand for ratings. At the end of September quarter, Pabrai Investment Funds held an 8 per cent stake in CARE Ratings.

Jash Kriplani

A welcome break for fund managers 

Mutual fund managers are looking forward for some rest in the next few weeks. With Christmas and New Year holidays approaching, foreign investors will go on a break, and that would mean trading would take place on low volumes. “Due to high volatility in 2018, fund managers have been on their toes this entire year. And given the elections, and issues like Brexit, things are expected to remain volatile next year. So, this is a welcome break,” says a fund manager, adding that many are breathing a sigh of relief that the market did not fall too sharply and the steady flow of systematic investment plans continued.

Joydeep Ghosh