Almost all major indices have hit all time highs and the exuberance is simply not palpable. So much so, that these days the other word for investment is Equities, thanks to the huge flow of liquidity post the note ban and low interest rates. Money has nowhere to go but Equities, if you desire to generate that magical and mystical thing called "Alpha" out of your investments.
But at the same time something strange or may be weird is also happening. Call it whatever you want, but it is simply not desirable and surely a disturbing trend emerging within the corporate world. Some very respectable promoter groups which have literally been the pillars of India Inc. so to say are behaving in a very surprising manner or should i say not keeping shareholders interests first and foremost as they have been doing so for as long as we have known them. Cant exactly say these actions are illegal but surely these actions have made their shareholders somewhat circumspect and which have come out in the public domain thereby affecting their share prices and also their brand values.
Starting with the boardroom battle which happened at the Tatas, followed the questionable merger involving some group companies at the Birlas, then the incidents at Infosys and now the Raymond group. As i said i do not know if these actions/motives can be considered illegal or otherwise, one thing is for sure these were incidents which could have been easily avoided or rather should have been avoided. So the obvious question is why these things happened in the first place and do they convey any message as to the future course of action?
While choosing an Equity investment, a thorough due diligence of the Promoters or the group is a must and probably the most difficult. And what adds to the problem is that it is a qualitative factor and not a ratio or something which can be quantified.
So having a look at the past record of the promoters is the only thing which can be done. But what if suddenly after many decades, the promoters themselves behave differently then expected. You may call it as one of the risks of investing in Equities, surely, but when this happens at the elite business groups it rattles investor confidence which can puncture the biggest of bull runs. And how then do you look beyond because when such reputable and big business groups surprise you there is no question of looking at smaller businesses and if that is so how do you recognise multibaggers and generate the "Alpha"?
But at the same time something strange or may be weird is also happening. Call it whatever you want, but it is simply not desirable and surely a disturbing trend emerging within the corporate world. Some very respectable promoter groups which have literally been the pillars of India Inc. so to say are behaving in a very surprising manner or should i say not keeping shareholders interests first and foremost as they have been doing so for as long as we have known them. Cant exactly say these actions are illegal but surely these actions have made their shareholders somewhat circumspect and which have come out in the public domain thereby affecting their share prices and also their brand values.
Starting with the boardroom battle which happened at the Tatas, followed the questionable merger involving some group companies at the Birlas, then the incidents at Infosys and now the Raymond group. As i said i do not know if these actions/motives can be considered illegal or otherwise, one thing is for sure these were incidents which could have been easily avoided or rather should have been avoided. So the obvious question is why these things happened in the first place and do they convey any message as to the future course of action?
While choosing an Equity investment, a thorough due diligence of the Promoters or the group is a must and probably the most difficult. And what adds to the problem is that it is a qualitative factor and not a ratio or something which can be quantified.
So having a look at the past record of the promoters is the only thing which can be done. But what if suddenly after many decades, the promoters themselves behave differently then expected. You may call it as one of the risks of investing in Equities, surely, but when this happens at the elite business groups it rattles investor confidence which can puncture the biggest of bull runs. And how then do you look beyond because when such reputable and big business groups surprise you there is no question of looking at smaller businesses and if that is so how do you recognise multibaggers and generate the "Alpha"?
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