During November 2007 Reliance money has recommended to buy the stocks of Shri lakshmi Cotsyn at a price of Rs 150 with a target price of Rs 250. Read the recommendation “We expect SLCL to deliver strong growth in the next 2 years with the completion of three phase expansion program. Buy at Rs 150 with a target price of Rs 240". As I am a customer of Reliance money, I have these details with me.
Reliance Capital during Jan 2007 has sold 1,00,000 shares of this company at a price of Rs 167.50!!!! (The copy of Business Standard with this information is available with me)
Inference is left to investors!
Note: Reliance Money is the financial services division of Reliance Capital.
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Reliance Capital had more than 8% stake in the company for last 1-2 years. They had bought it at Rs.50-80 level. After Dec'07 they have reduced their stake to about 4.5%, booking profits after making about 100% returns (may be due to less weightage to textile sector or redemption pressure.
This doesn't make company a bad investment at this point. Look at the growth and P/E, and you will find reasons to invest.
One can see the 'distribution pattern' in the chart of Sh Lakshmi cotspin from Dec, 2007 onwards. When I recommend a stock at 150 giving a target price of 250, I would book profit at 200 plus and not at 150 plus! As long as we have innocent investors out there to buy based on recommendations from brokerage houses, brokerage houses and mutual funds companies can make merry!
Last year, one of the Calcutta based investment advisor recommended some stocks and took opposite positions in the same stocks and SEBI had directed his company to cease and desist from giving any recommendations.
Read the complete story in moneycontrol - http://news.moneycontrol.com/mccode/news/article/news_article.php?autono=198855
I have given the excerpts of this article below:
The investment advisor had recommended these stocks to investors at large, but he had also started selling the stock after giving an opposite advice to the market.
The Sebi release says, "This indicates an obvious attempt to mislead the investors through investment recommendations, in a striking posture of ambivalence coupled with interest. It was apparent that the analysst was purveying information to the public, which he himself did not appear to believe to be true to make unfair gain for himself at the cost of lay investors."
Is this not applicable for big brokerage houses?
I know Sh Laksshmi has a low P/E and I don’t have any views about this company as of now. My point is that retail investors should take extra care before making any investment decisions (including my own blog)
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