It is ironical that Prof Sanjay Bakshi’s mastery in stock picking goes unnoticed even by his own devoted students. If you ask his students about arcane issues like “Bayes’ Theorem” and such, they will wax eloquent and debate endlessly. However, if you ask them about the Prof’s stock picks, they will stare at you dumbfounded as if you are talking Greek and Latin.
However, the Prof’s stock picks do get the recognition they deserve from other super-savvy investors. We saw a few days ago how the legendary Billionaire Narayana Murthy, who is highly acclaimed for his astute understanding of business and economics, scooped up a big chunk of Ambika Cotton, one of the Prof’s favourite stocks.
In an earlier piece, I lamented that while all of the Prof’s stock picks are glowing winners, one of them, Vaibhav Global, had disappointed sorely with a loss of nearly 50% since the time the Prof wrote about the stock in a lecture note.
Fortunately, I had the presence of mind to ask whether the throwaway price at which the stock was then quoting was a “golden opportunity” for us to load up on the stock.
Well, at least one heavy-duty investor appears to have been thinking on the same lines. Malabar India Fund, a highly renowned PIPE Fund, bought 4,73,406 shares in the July to September 2015 quarter. Consequently, Vaibhav Global now boasts of three super-savvy investors, Nalanda Capital, Matthews India Fund and Malabar India Fund, holding about 15.65% of its equity capital.
Now, the best part is that the heavy-duty investors are still buying aggressively. Yesterday, the stock surged 14%. Today, it surged 20% and tripped the upper circuit. The stock is up a whopping 38% in just the last week!
The aggressive buying on the eve of the Q2FY16 results (due on 04.11.2015) indicates that the results are expected to be good, maybe even blockbuster.
At this stage, we must note that Vaibhav Global is still nearly 50% down from its 52-week high. Even on a YOY basis, the stock is down 40%. So, it has a lot of catching up to do.
If the Prof is correct in his theory that Vaibhav Global has a “dominant” and “high cash flow generative” business and that its moat is “virtually impenetrable” due to its “low cost advantage formula”, then the Company could have a long way to go.
Also, the impending IPOs of the e-com giants, Infibeam, Snapdeal, Flipkart etc, is likely to create an enormous hype about the e-com business. While all of these companies are making heavy losses, Vaibhav boasts of a gross profit margin of 61%, ROCE of 44%, ROE of 31% and zero debt. So, you can imagine the valuations that Vaibhav Global can command in comparison to its peers.
So, the bottom line is that we need to keep an eye on Vaibhav Global’s Q2FY16 results and decide whether there is a gravy train coming our way which will lead us to effortless riches!