A few days ago, I wondered aloud about why Porinju Veliyath, who has publicly professed his love for a “concentrated portfolio”, has been buying so many random small-cap and micro-cap stocks. Each purchase is in a bulk deal which gets reported to the stock exchange. The disclosure attracts a great deal of attention from Porinju’s vast army of followers and fans on twitter and elsewhere. Several of them throng the counter to buy the stock. The stocks are generally illiquid or have low floating stock and it is usual for them to stay in the upper circuit for several days till the excitement cools down.
The interesting part is that what while Porinju’s purchases of the stocks are known, it is not known whether he holds onto the stock or dumps them soon after the purchase to take advantage of the increased prices.
Of course, Porinju is under no obligation to disclose any fact relating to his transactions. He does not publicly recommend these stocks and is not making any warranty that he will hold the stocks for any period of time. He is perfectly justified in buying the stock on day one (in a bulk deal) and selling it on day two or thereafter (in a normal deal) and pocketing the profits.
Palred Technologies is a case in point. This unknown micro-cap shot into the limelight when the Bulk deal data showed that Porinju had bought 2,00,000 shares on 27.05.2015 at Rs. 23.55 per share.
The purchase created great excitement because Palred Technologies, an e-com retailer of electronic products, was suddenly supposed to become “the next Amazon.com”. The stock price soared to a high of Rs. 144 on 21.10.2015.
At the peak, Porinju was staring at incredible gains of 526% in just five months of investment, which works out to eye-popping annualized gains of 1300%.
Thereafter, the excitement began to peter out. Also, the Company’s top management, Palem Srikanth Reddy (CMD) and Ameen Khwaja (CEO) were accused by SEBI of having indulged in alleged acts of insider trading and pocketing illegal gains.
The result is that the stock price has plunged and is presently resting at Rs. 57.
Porinju got into a bit of a skirmish with some of his followers/ fans on twitter. They wanted to know why he bought an alleged tainted stock like Palred Technologies. In the process of that discussion, Porinju revealed that he had bought the stock at prices ranging from Rs. 15 to Rs. 25 and that he had dumped the stock when it had surged to about Rs. 100.
(Note: These tweets appear to have been deleted though they can be retrieved from google cache (1) & (2))
The information about Porinju’s transactions in Palred was revealed in fortuitous circumstances because Porinju has otherwise made it clear that he generally does not disclose his trades:
@Trivendraa I disclose my sale of shares only to Income Tax Dept. – except Force Motors & Shreyas being disclosed on biz channels 🙂
— Porinju Veliyath (@porinju) February 17, 2016
Anyway, the important lesson from the episode is that the fact that a well-known investor has bought a stock should never be a reason for other investors to blindly copy his move and buy the stock. We never know when the investor might dump the stock. In fact, Porinju had himself administered this warning in a TV show. He pointed out that there is an “unhealthy trend” in the markets of casual investors paying attention to “who buys what“. He cautioned investors (@ 8.50) not to blindly clone the investments of celebrity investors but to invest only if they are personally convinced about the fundamentals and valuations of the stock.
I loved the way entire episode has been written.
My belief is any investment and purchase I make in Equity is my choice and should never blame anyone. If get profit never give the credit and in loss as well be calm has been my way.
I am retired and my passion is this stock market.
I love to read this thread just for my joy. Arjun! I like your narrative.
In stock market bulls make money, bears make money, brokers make money only small investors get slaughter. Jago investors jago !!
I agree, retail investors are fed with wrong information and hence they end up buying high and selling low. That is the reason why I have started thread for retail investors where I am discussing value stocks. I hope like minded people like you contribute to it.
hello bholu
i’ve not participated yet but must let you know that i appreciate your efforts for the retail investor
may i contribute?
Thank you. U are most welcome. Anyways you did not need my permission.
Do not trust those opportunistic fund managers like porinju or any one coming on business channels and claiming they are bull since 25 years!!!! Those advisors who still advise to buy stocks which they are on disposing mode are cheeters
I don’t think he is a cheat. He always warns people to not buy stocks that were valuable to him at Rs.10 may not be valuable at 100.. BE PRICE SENSITIVE… BE PRICE SENSITIVE .. He repeats.. and moreover he doesn’t recommend the trades.. He only recommends companies that are good..
he was a trader/broker, what’d the fanboys expect? lol and shamelessly goes on social media selling stocks via cryptic tweets and the herd joins in. followed him on twitter just for the fun
Following him sometimes help in learning but it is difficult to not get influenced. I lost more than I gained. I followed for three stocks. Lost in 2 and gain in one. Overall heavy loss.
How to remember always not to get influenced by celebrity investors for stock buy and sell?
I need a way. I think it is important.
Satya,
The start is with your realisation that one shouldn’t.
Do you really think he’s going to dish out a buy call before he’s built a position for personal and his fund? There’s no easy money. And if people are saying certain things, there’s got to be a reason. I remember Alpa Labs was his another buy. Reality check now.
It’s all about choices. We all have choices to make. Don’t follow them blindly, at the very least.
Do check this book – the billionaire’s apprentice
I think it so uncool what porinju did. His replies are not so kind. Who says he doesnt come on tv and recommends. He has come in different channels at least five times and talked about future consumer and how that is now his biggest holding . He goes on to say that he will hold it for ten or twenty years . The point here is that he has a right to do what he wants but being a known figure and knowing fully well that he has followers , he needs to be more honest about his disclosures. An investor needs to be careful n pragmatic in his approach. Let any of these so called famous analyst or these broking houses say anything, dont buy expensive . Saving ones investment comes before growing ones investment. Dont listen to these so called wiz kids of the financial world when they say ….this stock has moat..cos you might be about to become a goat…sacrificed …cooked…and consumed.
Dear panwar sir. What you said is 101% correct. We should not believe or depend these high profile stock traders. They are doing their job, which can be done in this way only. Some of their recommendations will go up, some will down, some companies will banish also. This is the way they make money at the cost of small ignorant investors. Porinju is not a dependable stock analyst. His recommendations are mostly based on sentiments and not on fundamentals. He is only a momentum creator. (Look Selan Explorations. He has once recommended even PVP ventures also in a TV show)
NOW NMDC……likes are available at unbelievable prices why should we go after PALRED and other REDs
his statement in twitter is very much like a conman. didn’t like it
we are a very tolerant nation !! Porinju was well aware of his clout and image he enjoyed. he chose to earn money by cheating his Fans and investors are left with a little loss and porinju with a big dent in his image. Please note the sarcasm he uses when he write you bought at 100. I never trusted him and never liked him and I am very Happy he has shown his true colours. very insensitive of you Mr porinju . hope you get duped too
Agree with you Sanjeev
Porinju plays a dirty game with his followers. Buying is bulk and selling in stealth mode is good for bloggers and not for someone of his stature. It misleads and he sells to his followers only.
His good pics are no brainers Tata Global, TCI, HSIL ( though all in deep red now) and when he applied brain one gets palred, tera, tara, alpa. Now thats his way of cheating. Stay away. here is a bit of my interaction with him.
https://ride2rich.wordpress.com/2016/02/14/msg-to-the-porinju/
“I am not politically affiliated but proud to be politically opinionated – that’s the spirit of patriotism!”
To enroll in the book patriots there is one and only condition is “politically opinionated ”
If you utilise insider info for trading in stocks it is okay, all sort of unethical trading or business is oaky but be politically opinionated then you are patriot!!!! Ridiculous
When porinju sir says something once it is like he has said it a 100 times. he is like rajnikanth. he is so fast that he even books profits and sells a scrip even then the media is showing his buy recommendation of the same scrip. he can even go in the past and change his purchase price and he can go in future and change the selling price. Jai ho Porinju sir! Einstein only suggested the theory of relativity. Porinju is a living example of it since he can time travel.
Dear Investors,
Everything in the stock market is a game.
DSQ software was trading around 7000(ex-bonus).
SSI sotware was trading around 14,000(ex-bonus).
Pentafour Software was trading around 5000(ex-bonus).
All the fund mangers and TV channels, wealth creation magazines continuously recommended to buy those stocks. Now where are these stocks?.
Brokers, Management & FIIs are playing the game.
They are investing huge money to make profit. (May be the methods are different).
Will they allow you to make profit? Think twice!!
Did you pay anything to Porinju? (when you were in profit)
Did he personally call you or send a message to buy a stock?
Can you take any action against TV, media? (they will escape by displaying a small word DISCLAIMER)
You should take care your hard earning money.
Thanks,
Yogaraj.M
Wonder what many of you above are expecting successful investors like Mr. Porinju to do for you?? ARE YOU EXPECTING THAT IF YOU FOLLOW THEM IN TWITTER/INTERVIEWS/BLOGS, THESE MAVERICKS WILL COME AND PERSONALLY TELL YOU WHAT TO DO IN STOCK MARKETS?? – BUY X AT THIS PRICE, SELL X NOW, ETC.. AS A SOCIAL SERVICE SO THAT YOU GUYS CAN JUST SIT BACK RELAXED AND BECOME RICH WITHOUT ANY EFFORT?? If you are really naive enough to think so then even God may not be able save you!!
If I am right, Porinju bought Palred at around 20, now the stock is at 57, whose fault it is if someone bought Palred @100 and lost money? I think even a person like Arjun who is watching market closely wouldn’t have known that SEBI is inquiring the promoters for insider trading few months ago.
ITS SUCH A SHAME TO DEMEANOR INVESTORS LIKE PORINJU WHOSE TWITTER-HANDLE IS LIKE A VIRTUAL CLASSROOM TO LEARN AND PRACTICE VALUE INVESTING! IF YOU DON’T EVEN HAVE THE ABILITY TO COMPREHEND THE BASIC PRINCIPLES OF INVESTING THAT THESE MAVERICKS TEACH, AND ARE ONLY INTERESTED IN STOCK TIPS THAT WILL MAKE YOU RICH OVERNIGHT THEN YOU ARE DOOMED TO LOOSE.
If you don’t do your own HOMEWORK and just keep CRYING about LOSSES, its high time you realize that what your getting is what you deserve!!
But why are you shouting?
Reading articles on rising “intolerance” in India could have influenced me! ??
lol intolerance everywhere aye?
Dear Sir,
I agreed 100% the following point mentioned by you.
BUY X AT THIS PRICE, SELL X NOW, ETC.. AS A SOCIAL SERVICE SO THAT YOU GUYS CAN JUST SIT BACK RELAXED AND BECOME RICH WITHOUT ANY EFFORT?
Thanks,
YogaRaj.M
Well Said.
I think it’s unfair to criticise Porinju for selling a stock after it multiplied 5-6 times. If one has to criticise anyone, then it must be the ‘investors’ who sit and whine after buying stocks which have have doubled and quadrupled from Porinju’s buy/recommended price, despite his constant warning to investors to be ‘price sensitive’.
I don’t think he has recommended this stock in any platform also. But if people did buy ‘with’ him seeing the bulk deal data, they would have made huge profits selling it after it multiplied 5-6 times. Even the ones who are holding now would still be sitting on handsome gains despite difficult market conditions.
no one is criticizing, only the way he has replied over twitter is totally unprofessional.
That’s his style. Even to irrational and idiotic tweets he’s replied with a sense of humour which is appreciable. Don’t see how it’s unprofessional.
I don’t think those lines were appreciable by any means valueinvestor. In fact porinju has accepted that he was dumping the stock at 100, he is clearly fooling public
So going by your logic, Porinju must never sell a stock after buying. Got it.
There will be always people like Porinju in the market. Everybody is here to make money. It’s the viewers, who need to use their discretion. The goat is fed through out the year, only to be cut. So you should not get emotionally attach to anybody. Again I am not against Porinju or anybody, just giving my 2 cents. Read a lot of books and you will be able to understand the play.