Has Porinju Veliyath Lost Confidence In His All-Time Favourite Stock?

Simran Farms is a super-ultra micro-cap with a market capitalisation of only Rs. 15 crore. It runs a poultry farm.

Surprisingly, despite its petty size, Simran Farms boasts of a number of ace investors in its roster. Apart from Porinju Veliyath (who is the largest shareholder), the company has won the confidence of well known stock pickers like Girish Gulati (HUF), Adi Lim Billimoria, Gandhi Kantheti etc.

Porinju’s association with Simran Farms dates back to several years. In an equitydesk post of June 2010, it was noted that Porinju is heavily invested in Simran Farms.

Porinju also publicly recommended Simran Farms as part of a Model Portfolio of 10 small stocks that he created for Malayala Manorama. Simran’s market capitalisation at that time was only Rs. 7 crore and Porinju recommended it with the comment: “Integrated Chicken Farms and processing. High growth business. Current year should see above Rs.100 Cr turnover. Valued at just Rs.7 Cr!”

It is quite clear from the comment that Porinju was extremely bullish about Simran Farms and that he expected it to be a multi-bagger several times over.

At the peak in March 2012, Porinju held 195,526 shares of Simran Farms constituting 5.18% of its equity.

However, thereafter, Porinju has been steadily selling the shares. His holding of Simran Farms as of 31st December 2014 stood at 100,000 shares. Today, Porinju sold a further chunk of 60,000 shares at Rs. 41.1 each.

This move had the punters at MMB puzzled and scratching their heads. Has Porinju lost confidence in the stock or is he just raising a treasure chest for some more attractive stock purchase, they wondered.

“I have entered this stock @ 40 … should i exit now?” one punter asked nervously while another ominously proclaimed “from tomorrow only lower circuits”.

Hopefully, Porinju will clarify his true intent about Simran Farms in a tweet sooner or later.