Basant Maheshwari, our friendly neighbourhood stock wizard, is never afraid of a fight. His stocky build, razor sharp mind and fast talking ability makes him a formidable adversary as many have of his detractors have found out. However, Basant has his limits of endurance. There comes a point when Basant prefers to leave the arena with his dignity intact rather than to continue to fight his erstwhile devoted followers.
That end point has been reached in the case of Basant Top 10, a stock advisory service that Basant started with great fanfare in October 2011.
Basant has now made the formal announcement, much to the disbelief of his followers, that the service will shut its doors on 30th June 2015.
What caused this unfortunate state of affairs is the slugfest between Basant’s detractors and his followers over the alleged failure of his star stock pick, Hawkins Cookers. The fight started at MMB and spread like wildfire across various blogs, including this one. What made the situation worse is the allegation that Basant himself sold off his holding of Hawkins’ shares even while he advised the public and his subscribers to buy the stock aggressively. Basant has not clarified whether he has sold off his holding or not. However, the allegation that he behaved in a manner which lacked integrity must have hurt him deeply.
With the benefit of hindsight, we can say that Basant got his strategy wrong. The problems started in September 2014 when Basant doubled the fees for his stock advisory services from Rs. 25,000/50,000 to Rs. 50,000/1 lakh. The fee was exorbitant (in comparison to peer services) and it did not go down well with investors. It also alienated a lot of his die-hard followers. Worse, his star stock pick, Hawkins Cookers, performed poorly. His other star stock picks, HDFC Bank and Gruh Finance, remained sluggish and under-performed their peers. What compounded the frustration of the subscribers is that this under-performance was in the midst of a raging bull market when all sorts of stocks of even dubious pedigree were surging to new heights. It is no wonder that the knives were out for Basant and at the first opportunity disgruntled investors slashed him with their caustic comments.
What Basant ought to have done, in the wake of the sluggish performance of his stock picks, is to have slashed his fee or offered steep “loyalty” discounts to his subscribers. This would have won him goodwill from investors and they would have taken a benign view of the failure of his star stock picks.
If Basant had adopted the latter strategy, he could have also made a bigger packet for himself. It is common sense that lower fees attract larger numbers of subscribers. If 100 subscribers pay a fee of Rs. 25,000 each, the revenues are Rs. 25 lakh. With 1000 subscribers, the revenues surge to a hefty Rs. 2.50 crore. If you manage to garner 5000 subscribers, you are talking of a mind-blowing annual income of Rs. 12.50 crore.
With Basant’s star power and frequent appearances on TV, attracting 1000 subscribers and more ought to be a cakewalk.
But, tragically, instead of going this path, Basant went the opposite path by hiking his fee. The result is there for all of us to see.
Incidentally, this is the second time that Basant has thrown away a lucrative asset. He did the same thing earlier with ‘theequitydesk.com’, an online forum for investors. Basant carefully nurtured the forum for several years and converted it into a bustling powerhouse for discussions on stocks. You can judge the popularity of the forum from the fact that it boasts of a mammoth number of 61,864 members and 196,943 posts. However, one fine day, Basant got into a scrap with some members of the forum over the prospects of some stocks. He got so disillusioned that he stopped participating in the forum.
The result is that the equitydesk.com is today like a deserted ghost town. It’s only visitors are a few occasional spammers trying to deposit their wares there. Its posts, several of which haven’t been visited/updated for several months/ years, stand mute witness to the glory days of the past.
Anyway, two good things may happen as a result of the closure of the Basant Top 10. The first is that Basant may revive his participation in the equitydesk. This will gladden the hearts of the 61,864 members who are presently drifting aimlessly, looking for an anchor. The other is that Basant will be able to talk stocks freely, and offer stock tips, in his TV programmes, without any hindrance. Many of Basant’s fans will heartily welcome this. So, there may be a silver lining to this dark cloud.