JP Morgan’s report on DB Realty

This report is as recent as 14 October 2010

We have a Neutral rating on DB Realty with Mar-11 PT of Rs 480 (12x Mar-11 normalized FCF).

The price at the time of writing the report was Rs 435. The price now is about Rs 130. Since then DB Realty has been involved in the LIC bribery scam, and now the 2G scam.

The JP Morgan report also say this —

Organizational build out is happening… with the company hiring a number of expats to build out project management /execution capacity. We believe that many of these professionals have had good experience in high rise construction in middle-east. The company has also engaged Deloitte /SAP for project implementation and monitoring purposes.

What about the f**king decimals?

I got this mail from ICICI Direct –

Market Strategy 2011 : Sensex target of 23165 for the new year

An analyst needs to be accurate. 23165? what about the decimals, guys, forgot them?

and check the language — this is meant the be a mail to a retail investor..

We expect the CY11 Indian equity performance to be growth induced and would mirror the trajectory of economic and corporate growth. We expect sectors levered to the consumption theme to continue finding favour and infra/capex related participation likely to be back-ended as elevated interest rates, inflation, commodity prices and tight liquidity would mute the confidence during the first half of CY11 despite compelling arguments in terms of need for infrastructure creation and valuations.

 

 

The Paul Chronicles

As the Paul fever sweeps across the globe, here’s a rundown on key Paul events in the last 24 hours:

Goldman is believed to have hired Paul as the chief market strategist. Morgan shares were down 20% in early trading. Pandit under renewed pressure to resign.

Mckinsey has authored a paper called ‘The new Paul paradigm – Eight steps to improved forecasting for global corporations’. Tata Motors has hired Mckinsey to build a ten year global demand model for Nano.  Analysts we spoke to deride the move. “Now how will they price it under $2500?” says an analyst who declined to be named.

Google and Microsoft have intensified efforts to build the worlds’ first true predictive browser. Both have codenamed the project ‘Paul’. Actually Microsoft is calling it Paul Version 10.  Market research commissioned by Microsoft has shown consumers believe first nine versions of any Microsoft version are no good. Microsoft may also release Windows 10 and Office 10 later this year.

Several Octopus farms have started coming up in special economic zones in China. Chinese leaders see a scope for transforming China’s manufacturing outsourcing led export model. “China aims to occupy the leading place in the global knowledge economy” said premier Hu Jintao. Chinese dissidents are wary of this new move. It could lead to food shortages, some say.

Harvard opened its MBA program to octopuses yesterday. “We educate leaders. The best talent always comes to Harvard” said the new Harvard dean Nohria. “And how will an octopus do a case study?” asked the Wharton dean. “The world will see why the Wharton method is better. Octopuses will surely come to Wharton” he added.

General Motors announced an all new car platform for Octopuses. “Why? asked the BMW chief. “Are they phasing out Chevrolet?” he wanted to know.

Indra Nooyi, the Pepsi chief is reported to be ecstatic at the new global fascination for Paul. She plans to hire him as the sole global brand ambassador for Pepsi. “He has eight hands. We can show our entire product line” she is believed to have said at an internal budget meeting. Some Pepsi brand managers are not amused. They fear budget cuts. “Never make an accountant the CEO” said the global brand head for Frawg, declining to reveal her name. She feels her brand will get cannibalised in the new policy. The global brand head for 7-Up is more hopeful. “Umm…which is the seventh hand?” she wanted to know.

(apologies to people or corporations named, take it in good humor..couldnt resist writing this)

Wolf in sheep’s clothing!

Reco Distribution (skewed)

(this is from a book ‘Ahead of the Market‘)

An analyst’s recommendation is supposed to boil all his research down into one simple actionable piece of advice, the answer to the
question, “Nice ten-page report, but what should I do about the stock?”
Not surprisingly, the recommendation is probably the most widelyused piece of information contained in the analysts’ research reports simply because it is, at face value, easy to understand and appears to be straight-forward. Do not be fooled. An analyst’s recommendation is a wolf in sheep’s clothing.

• It is simple.
• It is straightforward.
• And invariably it is wrong.

In fact, if you had bought those stocks that were the most highly recommended by analysts over the two-and-a-half-year period from April 2000 to September 2002, you would have lost a phenomenal 47%.

The Science of Investing – 2

Are institutional broking analysts not used to tracking high yield stocks? Or so it seems.

Look how they are tying themselves in knots here..

Assuming investors prefer high-yield stocks because of their lower uncertainties, we believe factors that reflect the reliability of dividends can be complementary to a high dividend yield strategy. We conduct a two-dimensional grouping simulation to identify factors that have significant effects on high-yield stocks. By creating a composite score based on select reliability factors, we propose a high dividend yield strategy that has proved to generate consistent return over the past 10 years based on our back testing. Even during times where the dividend yield factor is not effective, consideration of the extra reliability screening in a high dividend yield strategy delivers better performance. The composite score is best utilised as a complementary factor to a high dividend yield strategy for stock selection, but not as a standalone factor to generate return.