It is a peculiar state of affairs that while the ace stock picker of a broking house publicly recommends a buy on a stock, the broking house does the opposite and sells the stock.
We saw this earlier in the case of HSIL. Though Daljeet Kohli recommended a buy of HSIL, his employer, IndiaNivesh Securities, did the opposite and sold off the stock. The sale was providential for IndiaNivesh because the stock crashed thereafter though members of the public who bought the stock on Daljeet’s advice were stranded.
The same situation can be seen with regard to the holdings by Ambit Corporate Finance in DCB Bank Limited. Ambit is Saurabh Mukherjea’s direct/ indirect employer.
Saurabh Mukherjea is/ was very bullish about DCB Bank’s prospects. In a televised interview between him and Narsee Munjee, the Bank’s Chairman, Saurabh meticulously emphasized all the positive factors about DCB Bank and recommended that the stock be bought. He said that there are a couple of “quite unique things” about the Bank and that it would give “good returns going forward”.
In another interview of April 2014, Saurabh said that DCB Bank has/ had the “greatest potential”. He called it a “well-run bank” and said “there is plenty to play for as far as DCB is concerned”. He also explained that DCB’s cost income ratio stands at 62-63%, compared to say 48% for HDFC Bank, and that by simply utilising the capital better, DCB could become a 15-16% ROE bank, which would it take it closer to 1.5-1.6 times book. “So it is a good bank, well-run by a CEO who took charge four years ago” Saurabh added.
However, Ambit Corporate Finance did not share Saurabh’s optimism about DCB Bank’s prospects. Instead, they went about systematically paring their stake in DCB Bank.
As of 01.01.2014, Ambit held 105,34,730 shares of DCB Bank, constituting 4.21% of its equity. This was reduced to 1,04,72,867 shares as of 01.04.2014. During the financial year 2014-15, Ambit sold 26,63,867 shares and reduced its holding to 78,09,000 shares as of 31.03.2015.
| Holding of Ambit Corporate Finance as of 01.04.2014 | 104,72,867 | ||
| 29-08-2014 | Market Sale | (-) 140,000 | |
| 30-09-2014 | Market Purchase | 140,000 | |
| 31-10-2014 | Market Purchase | 900 | |
| 21-11-2014 | Market Sale | (-) 193,500 | |
| 28-11-2014 | Market Sale | (-) 356,400 | |
| 05-12-2014 | Market Sale | (-) 424,800 | |
| 12-12-2014 | Market Sale | (-) 296,200 | |
| 19-12-2014 | Market Sale | (-) 885,500 | |
| 31-12-2014 | Market Purchase | 60,633 | |
| 09-01-2015 | Market Sale | (-) 130,000 | |
| 16-01-2015 | Market Purchase | 282,000 | |
| 23-01-2015 | Market Sale | (-) 125,000 | |
| 30-01-2015 | Market Sale | (-) 396,000 | |
| 20-03-2015 | Market Sale | (-) 200,000 | |
| Holding of Ambit Corporate Finance as of 31.03.2015 | 78,09,000 | ||
Ambit’s systematic selling has continued thereafter as well. As of 30.06.2015, the holding was reduced to 73,09,300 shares. As of 30.09.2015, the holding stands further reduced to 54,59,000 shares comprising 1.93% of the equity.
This means that in the period from 01.01.2014 to 30.09.2015, Ambit sold 50,75,730 shares and reduced its holding from 4.21% to 1.93%.
This suggests that Ambit had lost confidence in DCB Bank’s prospects even though Saurabh Mukherjea was gung ho about its prospects.
As it turned out, the decision by Ambit to sell its holding was a sensible one. We saw earlier how the stock tumbled 20% yesterday and 13% today. Most research analysts now have a sell rating on the stock.
It will be interesting to know who in Ambit offered advice contrary to what was offered by Saurabh Mukherjea. That person must be an ace stock picker in his own right.
It will also be interesting to see what Saurabh Mukherjea’s views about DCB Bank are now and whether he is still as bullish!
There’s always been a suspicion in the minds of common investors as to the authenticity and veracity of the reports put in the public domain by various brokerage houses and their senior employees and actions of the same brokerage houses. As rightly pointed out, earlier also there have been occasions when there were clear conflicts between what is put forth in the form of a reports and the actions taken by the same brokerage houses.
Earlier Daljeet Kohli was the culprit, now Saurabh Mukherjee is the culprit. I think investors would start losing their confidence and trust in them very soon.
Bizarre thing is that even after public outrage, there is no clarification by any of them for the contradiction.
Like it is stated I am stranded with HSIL following Mr.Kohli, and to my luck I am safe and out from DCB with marginal profit. Reading this space regularly is giving me much required insight about the contradictory views and about me as how I should be guided by me only.
Thank You !!!
It is better to have your rationale and conviction for your stock pick.
You may seek advice from some independent and unbiased advisor.
why did Ambit sell the stock when it was recommending it ? also can anybody throw light on why the stock fell so sharply
Saurabh and Daljeet are playing a simple game called “Running with the hare and hunting with the hound”, two times is definitely not a coincidence, pity Indian investors believe such outfits
Nothing wrong with DCB bank .Most of these big shots are traped in realty sector .They now just to change the direction of small investers who this time are invested in compartivly with good stocks with qualty management. DCB bank is same bank it was three days back and has done nothing wrong to desrve this punishment. Growth is life,faster the better.Managemt might have planned well and hopefully execute it also well.If you believe in ,Kal Kare So Aaj Kar,Aaj Kare So Aab ,then nothing to panick .You have bought right,So please sit tight .All these Doom drumers will make a big line with cheque books on this counter after better execution from management ..
it seems some foul play recommend buy and on side start selling. even buying selling pattern is not clear selling in lakhs and then buying in 100s something is certainly fishy and was cooking internally. As usual we all are burnt now with their cooking. shame on so called ethical revelation of disclosures by these stock market pandits.
btw, this site is doing a great service for investors, God Bless
“It will be interesting to know who in Ambit offered advice contrary to what was offered by Saurabh Mukherjea. That person must be an ace stock picker in his own right.
It will also be interesting to see what Saurabh Mukherjea’s views about DCB Bank are now and whether he is still as bullish!”
Is it really so hard to get what happened here?!!
It’s a clear fraudulent strategy that these supposedly aces are doing. SEBI should whip out severe penalties to such idiots who resort to unscrupulous means to fool the public.
And people too should not rely on these thugs for their investments. Have a view and use common sense,matters a lot other than books,valuations with weird assumptions and also their foolhardy schemes.
I wonder why SEBI has not done anything to these people. I wish to see a developing India without such idiotic people.
Someone please complain to CFA board of his behavior. That should put some sense in to him.
Why somebody doesn’t make a formal complaint to SEBI to look into the affairs. SEBI should take up the matter as they have taken the matter earlier in case of HBJ Capital (the errant and cheat advisory service firm) of Bangalore. SEBI banned HBJ Capital.