My first “bad” call: Borosil

by | Oct 15, 2018 | Dear old dad | 0 comments

There are about 30 stocks in Dad’s portfolio, laden with blue-chip large caps, companies that make things or provide raw materials for them. I locate his account, start looking at performance. I have been in India a few months now, watching markets, trying to learn, feeling like a student, loving it. One stock, Borosil glass stands out, it is up 15x in the last 4 years from Rs. 500 to about Rs 7500. Other names with similar outsize gains are in the media, but little about this one. Take the money, I think but fire up the Bloomberg to see what their fundamentals are. It used to make industrial glassware, now it has switched to microwaveable glass, earnings and revenues appear to be growing at about 15% annually, hardly the stuff that warrants a price increase of 15 times in a few years. I call his broker in Chennai, sell his 400 shares, triggering two more surprising things.

 

First, I am amazed to find that this order took 13 different trades, with commissions on each. The broker is ripping you off, Dad I say, we must go online! But it is really poor liquidity.

Second, earnings come out a few weeks later, they are about 12% for the previous year, the stock rips up Rs 1500 per share, because they have announced a 10 for 1 stock split.  Father is quite pleased that I messed that trade up!