Amitabh Bachchan, the doyen of Bollywood, is our favourite type of investor. In keeping with his staid and dignified personality, he has a conservative approach towards investment and prefers to invest only in well-known blue chips and trusted old war horses. However, he is not averse to experimenting now and then in new companies if he feels he can get a quick multibagger out of them.
In July 2011, Amitabh Bachchan could barely contain his excitement as he filled in the form for the Birla Pacific Medspa IPO. After all, when was the last time you got a share in a Birla company at par and that too of one engaged in the lucrative business of running a Spa? Also, the company was promoted by the high profile Yash Birla, well known for being a party animal and for hobnobbing with rich teeny boppers.
Amitabh Bachchan sensed a multibagger in Birla Pacific Medspa and bought 16,75,000 shares (1.49% of the total equity) by investing Rs. 1.67 crore.
Amitabh Bachchan’s instincts were initially proved right because soon after listing, Birla Pacific Medspa spurted to an all-time high of Rs. 30, trebling his investment.
Sadly, after that, Birla Pacific Medspa has been on a free-fall. It ended yesterday at 65 paise resulting in a huge loss for Amitabh Bachchan.
Amitabh Bachchan’s other experimental stock also did not do well. He had high hopes from Fineotex Chemical in which he holds 5,55,452 shares comprising 4.95% of the total equity. Fineotex Chemicals came out with an IPO in Feb 2011 at the price of Rs. 72 per share and soared to a high of Rs. 353. When it started falling, Amitabh Bachchan thought he was getting a great bargain and bought the shares between Rs. 170 to Rs. 150 per share. Fineotex Chemicals is presently quoting at Rs. 26 per share.
Other stocks like Neuland Labs and Reliance Power have also turned out to be duds.
However, all is not lost for Amitabh Bachchan. In a brilliant tactical move, he got Just Dial to allot to him 62,794 shares at the par valaue of Rs. 10. JustDial closed its IPO at the price of Rs. 543 and will list shortly at a heavy premium. Even at the IPO price, Amitabh Bachchan has made himself huge multibagger profits of Rs. 3.41 crores.
Amitabh Bachchan is probably a bit chastened after his bitter experience with Birla Pacific Medspa and Fineotex. However, he is a quick learner and the one lesson that he would have learnt (as all of us have done at some stage or the other) is that it is better to tread the beaten path by investing in blue chips rather than trying to make a quick buck by investing in dubious stocks.