More Hedge Fund Employees were arrested by the FBI on Insider Trading Charges . Note Raj Rajaratnam the high profile hedge fund manager of the technology hedge fund is already cooling his heels in jail after being convicted of insider trading by paying money to company and insiders for illegal information. A number of low rung employees have also been jailed for lesser terms. His friend Rajat Gupta who was a former Mckinsey chairman is also facing charges which may result in conviction for passing confidential information to Rajaratnam.
Note blatant pump and dump IPO’s have made the Indian market a heaven for stock market operators.Despite this going on for years,only recently SEBI has taken some steps against the manipulartion of the primary market.Now SEBI has taken some steps in the Insider Trading case as well by fining executives of JP Associates and Ranbaxy both of which are constituents of the Indian main stock market index. However a mere fine will not do to deter insider traders.A big jail term for a insider trader will make white collar criminals think more in indulging in criminal activity rather than small fines .
SEBI has been strangely and inexplicably absent from its role of supervising the primary market in India despite a stream of pump and dump IPO by small disreputable promoters and investment bankers.Most of these IPOs have no fundamentals to justify lofty valuations and without the role of market operators and investment bankers have no hope in hell of getting subscribed.Its a scary gambling scheme in which retail investors put money only with the hope of getting out on the first day with probably listing gains.There is no way that an investor can make money in these issues in the long term.However the shenanigans of the promoters and bankers have gone unpunished leading to more and more of these junk IPOs getting into the stock market everyday.This only brings a bad name to Indian stock markets where manipulation can happen so brazenly and openly and pushes away genuine investors away from equities.SEBI has been recently been trying to get more retail investors into the stock market however it seems mere words as it does not take action on open corruption.
Note the stock fell before it announced the results after the close of the markets which means that insider trading had take n place.The volumes at 10 times certainly seems to hint so as the JP Morgan downgrade of the stock could not have led to such a big fall in which there are a large number of foreign and domestic funds as investors.Besides its problems in Andhra Pradesh are hardly new and Indian brokers hardly that good that their reports cause such big stock price movements.Like other SEBI probes expect this one to fail or result in a small penatly which will not deter more such white collar fraunds in the Indian Stock Market.Insider Trading in India is quite widespread with some of the biggest business groups having been fined by SEBI like ADAG etc.
Future Ventures is a VC/Private Equity Company that has invested in a number of small Indian companies and startups mainly focused on the consumption industry in India.With India growing at around 8-9% in the last few years and expectations of strong future growth driven by consumption,Future Ventures seems a good investment considering the portfolio of companies that it owns (analyzed below).Future Ventures is a part of the Future Group run by Kishore Biyani who started India’s most famous retail company Pantaloons.The Company has set a price band of 10-11 rupees a share with a target of raising around Rs. 750crore though the IPO.This would represent around 40% of the equity which would give it a post IPO market capitalization of around $375 million.Note the company had tried to come with an IPO 2 years ago but it was deemed to expensive at that time.
Lovable Lingerie is an innerwear textile company that is coming out with a $20 million IPO.Unlike other totally junk issues which are totally hands of market operators,this one seems to have decent fundamentals and the valuation is not too expensive either.The company has managed to sell 6% pre-IPO to Sequioa Capital which is one of the blue blood PE firms in the country.However this should not be an endorsement given that a number of their investments have bombed in the recent mid cap and small cap carnage.Corporate governance and management issues in small companies in India is totally out of control so investing just based on pure fundamentals does not help.Also a number of other companies in the same sector in textiles remain at attractive valuations.That said the company does have good differentiation as it leverages on the fast growing Indian consumer growth story.The company sells Lingerie though top retail outlets like Lifestyle,Shopper’s Stop in top Indian metros and has good brand recall.Here are the positives and negatives of the company based on its DRHP.