• My current view:
• Pay it down
• Dogs of Nifty
• Part of mean-reversion strategies.
• Reversion to the mean as a mental
model from statistics
• Arithmetical advantage
• Budget announcements
• Dividend announcements
• Other market value sensitive
announcements
Why FM works in Value
• Asymmetric response to news- • However, even a mild positive
good or bad. news will have a significant
positive impact on price.
• Stock is cheap because its out of
favor • What matters is not whether
the news is good or bad, but
• Market does not expect much whether it will surprise the
from this company market.
• Cut in dividends
• Dividend skipped
• Hike in dividends
• Special dividends
• I think its very important to monitor what the insiders are doing and what
else is happening in the shareholding structure.
• Over-valued stock + large FII interest plus + F&O + insider selling+ weak
accounting + slowing growth (not factored in market price) = short
candidate when market is also over-heated.
• Holding companies
• Trade-off involved, FM
Over-optimism
• 80% of drivers consider themselves to be “above
average”