**Multibagger Hunt: Challenges and Opportunities Part II**
Maximum Point of Pessimism
Often, investors rush into buying a stock, eager to catch the next big winner in the market. The news is overwhelmingly positive, every analyst is recommending it, and trading volumes are surging daily. Everything seems perfect, and we buy in just when the stock has peaked. But the next day, the price starts to dip, bit by bit. As the initial excitement fades, the stock begins a downward spiral. We wait, hoping our analysis was not wrong, convinced the stock could not fall any further. But it does—first a 10% drop, then another, and soon it seems like everything is conspiring against us.
Regulators notice the erratic price swings and place the stock under surveillance. Now the real pain begins. The stock sinks even further. We cling to the hope that the so-called multibagger, which everyone was raving about, will recover. But eventually, the stock loses most of its value, leaving us with significant losses. At this point, we cannot take it anymore. We exit the stock, often at its lowest point—this is the maximum point of pessimism. Ironically, it is usually when the stock is ready for a rebound. However, the emotional toll prevents us from seeing any potential upside, and we hastily cut our losses, missing out on the eventual recovery.
One recent example, discussed in Part I, is that of Protean. After lacklustre third-quarter results in 2023, the stock plummeted to the 800-850 range, a steep drop from its peak of over 1500. However, the very next quarter saw significant improvement. New verticals were launched, new opportunities arose, and the stock took a dramatic U-turn, now trading well above 2000—all within six months.
Common Sense Investing
Investing does not have to be complicated. Most of it is rooted in common sense. Yet, we often think it is like rocket science and defer to so-called experts who bombard us with complex spreadsheets and formulas. We believe the more complicated the analysis, the more credible it is. But consider a company like Protean eGov Technologies, which builds digital infrastructure with funding from financial institutions and government agencies. It offers e-governance solutions, holds a market share of nearly 50%, and expands its verticals every year, winning global awards. Investing in Protean is almost a no-brainer.
I overlooked Protean when it was trading around 800-900. It only caught my attention after I read an article about digital infrastructure—an emerging theme as more government schemes move to digital platforms. Upon visiting Protean’s website, I discovered that they are leaders not just in PAN card processing but in several other emerging areas.
What’s Next?
With these new verticals, Protean is poised to become an industry leader. The only challenge is the collection of dues from various state government agencies, which sometimes causes them to miss quarterly targets due to delays in payment clearance. However, the growth potential from these new verticals should drive the stock to greater heights. All in all, the outlook for Protean is very promising.
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