September 2009 – Page 2

Euro Multivision IPO

Open and Close Date of Euro Multivision IPO

The Euro Multivision IPO opens on 22^nd September and closes on 24^th September 2009.

Euro IPO: Price Range

The price range of Euro Multivision is between Rs. 70 and 75.

IPO Grading by CARE: Euro Multivision

CARE has graded the IPO 3 out of 5 which means average fundamentals. The positives in the grading are the favorable dynamics in the new business, and the availability of SEZ status.

The negatives are delay in the implementation schedule of the Photo Voltaic (PV) project, high debt â€“ equity ratio, small scale of existing operations, reducing margins in existing business and uncertain export market among others.

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Interesting Reads 19th September

OneMint got a new logo this week and I don’t know whether email and feed subscribers visit the website very often or not, so if you haven’t seen the new logo yet, get to the site now, and let me know what you think.

Now on to some great posts I browsed through this week:

Articles

How to consolidate debt: Ways to reduce debt load @ The Smarter Wallet

Scotttrade Review: Top Brokerage for small investors @ The Digerati Life

Can the stock market save the economy? @ The Reformed Broker

Discover card brings back the 12 month balance transfer offer @ The Dough Roller

Early Retirement Forum @ My Wealth Builder

Historical investment returnsÂ of asset classes over the last decade @ Investing Toolkit

Nostalgia @ The Simple Dollar

A house is a great way to save money – really! @ Vilkri

Avoid overdraft fees with a balance buffer @ Five Cent Nickel

Things to do before you redo your website @ Seth Godin

Why didn’t the major bank CEOs show up on Monday @ Baselinescenario

BRIC Master @ AFFINE Financial

Carnival of Twenty Something Finances

Photo credit: Jukka Vuokko

Quick notes on ETFs, Mutual Funds and IPOs

I see questions around a few things in comments and emails regularly, and thought Iâ€™d write a quick post addressing some of the simpler ones (who likes complicated stuff anyway).

Mutual Fund and ETF Expenses: All ETFs and mutual funds incur expenses, which are usually expressed as a percentage of their assets. The higher the expense ratio, the more expensive the fund is. So, you should compare expense ratios and go for one that has a lower ratio (other things being equal).

Underlying assets: It is not necessary that all Gold ETFs have gold as their underlying asset also. Some funds may have stocks of gold mining companies, others may just hold future contracts that track a gold index, and some others may own physical gold. You need to find out what is the underlying asset of a particular fund, so that you know it matches what you had in mind. Here is a post I wrote some time ago about different type of commodity funds.

Fund of funds may charge double fees: Fund of funds own other mutual funds. If a fund of funds charges you fees, then that means you end up paying double fees. Once for the fund of funds, and then for the mutual funds that such a fund owns.

No notification on allotment of IPOs: This one is specific to Indian IPOs and causes a lot of grief to investors. You donâ€™t get emails or any other notifications when an IPO allotment is done. You need to keep a tab on the allotment and listing dates yourself. A good way to do this is by setting Google alerts.

These were a few things that I have recently seen, and if you can think of anything else, letâ€™s hear them, and try and find an explanation to them.

HDFC Mutual Fund

Here are the various HDFC mutual funds in the equity space:

HDFC Mutual Fund: Close Ended Fund

HDFC Mid â€“ Cap Opportunities Fund: This is a close ended mutual fund which invests in small and mid cap stocks.
HDFC Infrastructure Fund: This is a close ended equity mutual fund which invests in stocks of infrastructure related companies.
HDFC Long Term Equity Fund: This is another close ended equity mutual fund with a maturity period of five years, and will invest in a diversified set of stocks bought for the long run.

HDFC Mutual Fund: Index Fund

HDCF Index Fund â€“ Nifty Plan: This is an index fund by HDFC mutual funds, which tracks the Nifty. This is an open ended scheme with the current expense ratio of 1%.
HDFC Index Fund â€“ Sensex Plus Plan: This is not exactly a passive index fund tracking the Sensex because only 80 â€“ 90% of its assets will be invested in stocks of Sensex and the rest in stocks outside the Sensex. It is a passive fund close to tracking the Sensex, but not exactly.
HDFC Index Fund â€“ Sensex Plan: If you are looking for the HDFC mutual fund that passively tracks the Sensex; this is your plan.

HDFC Mutual Fund: Other Plans

HDFC Tax Saver (ELSS): This is an open ended scheme with a three year lock in and tax saving benefits. The fund will primarily be invested in stocks with up to a maximum of 20% in debt.
HDFC Prudence Fund: This is an open ended fund that is a balanced fund. This means that this is not primarily invested in stocks, and the allocation will be changed by the fund manager between debt and equity based on the market condition.
HDFC Arbitrage Fund: This is an arbitrage fund aims to generate returns by exploiting the arbitrage opportunities between the spot and derivatives market
HDFC Premier Multi Cap Fund: This is an open ended growth oriented mutual fund that invests in mid and large cap blue chip companies.
HDFC Capital Builder Fund: This is an actively managed fund that aims to invest in strong companies which are below their fair value. Strong companies and fair value are of subjective terms of course, and will be decided by the fund manager.
HDCF Equity Fund: It is an open ended mutual fund that invests in companies that are expected to experience growth higher than their industry peers. The top three holdings as on 31^st July are ICICI Bank, SBI and ONGC.
HDFC Long Term Advantage Fund (ELSS): This is an open ended mutual fund from HDFC with a three year lock in period and one that invests in equity and equity related instruments.
HDFC Balanced Fund: This is an open ended mutual fund that will invest in debt and equity. It is positioned for people who donâ€™t want to get too much exposure to equity and the accompanying risk.
HDFC Core and Satellite Fund: This is an open ended equity fund that aims to invest in stocks that are trading below their true value. This is a subjective term and depends on the analysis of the fund manager.
HDFC Top 200 Fund: This mutual fund looks to invest in equity and equity linked instruments primarily drawn from the companies in BSE 200 Index.
HDFC Growth Fund: This is an open ended mutual fund which predominantly invests in equity and equity related instruments.

g.cn

Image by betta design

For a brief period I worked with an Indian washing machine company. My boss there told me how they were scared when India was liberalizing, and companies like LG and Samsung were entering the Indian markets. Those companies had enormous resources, advanced technology, competitive pricing and almost everyone in those days thought that they will drive others out of business.

That never happened of course. Everything just went fine. My boss said that a big part of that was local knowledge. They had developed a sort of an ear for local nuances, which gave them an edge over the LGs and Samsungs of the world.

I was reminded of this yesterday when I started hunting for reasons why Baidu does much better than Google in China (I donâ€™t remember why I started doing this). Baidu is a search engine, much like Google, and has a commanding position in China.

Continue reading “g.cn”

Real Estate ETF List

Here is a list of real estate ETFs traded in the US.

iShares Cohen & Steers Realty Major Index (ICF): This real estate ETF invests in an index that represents large and liquid real estate investment trusts (REITs) as represented by the Cohen and Steers Realty Major Index.

iShares Dow Jones U.S. Real Estate Index Fund (IYR): This ETF invests in an index that measures the performance of the Real Estate industry of the U.S Equity market, and has 75 holdings. Its three largest holdings are Simon Property Group at 8.34%, Public Storage at 4.91% and Annaly Capital Management IN at 4.8% (as on Sep 07 2009).

iShares FTSE NAREIT Industrial / Office Capped Index Fund (FIO): This real estate market tracks an index that represents the industrial and office real estate sector of the U.S. equity market. It has 26 holdings, with Boston Properties PLC being the biggest holding at around 14.57% of the whole fund (as on Sep 07 2009).

iShares FTSE NAREIT Mortgage Plus Capped Index Fund (REM): This ETF tracks an index which measures the performance of the real estate, mortgage finance, and savings association sector of the US equity market. Its largest holding is at Annaly Capital Management IN at 22.18% (as on Sep 07 2009).

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Pipavav Shipyard IPO

Pipavav IPO: Open and Close Dates

Pipavav IPO opens on 16th September 2009 and closes on 18th September 2009.

Pipavav IPO: Price Band

The price band of Pipavav IPO has been fixed between Rs. 55 and Rs.60

IPO Grading: Pipavav Shipyard

The IPO has been graded 3 out of 5 by CARE. This denotes average fundamentals. I was interested to see how CARE graded this IPO as one with average fundamentals because they don’t have any operating history at all.

CARE gives the following reasons which are in favor of Pipavav:

1. Strong Order book position

2. SEZ approval to the subsidiary of Pipavav.

3. Professionally qualified and experienced management.

4. Strategic tie up with Punj Lloyd Ltd.

The factors weighing negatively for the grading are:

1. Absence of track record in shipbuilding.

2. Project risk associated with new projects.

3. The company has a history of corporate debt restructuring because some of its earlier plans had gone awry.

4. Concentration of order book to the main line shipping sector.

Business of Pipavav Shipyard Limited

Pipavav Shipyard currently has not commenced commercial operations and is engaged in building the Pipavav Shipyard located on the west coast of India adjacent to major sea lanes between between the Persian Gulf and Asia.

After the construction of the shipyard is complete Pipavav would be able to construct and repair ships and vessels of various sizes and construction of products like offshore rigs, jackets and vessels for oil and gas companies. Pipavav right now has agreements in place for the construction of 26 Panamax bulk carriers with the capacity of 74,500 DWT each for delivery from 2009 to 2012. The construction of the shipyard itself is expected to complete by October 2008.

Key Risks

Pipavav has no operating history and it becomes hard therefore to judge how well it would do in the future.

Pipavav has no prior experience in ship building or repair or offshore activities.

There is a large dependence on the proceeds of this IPO itself to mobilize funds and proceed with the construction of the Pipavav Shipyard therefore the general stock market conditions etc. influence the initial success of the company.

Objects of the Issue

The primary purpose of the IPO is to mobilize funds for construction of the shipyard and a sum of Rs.4,550 million has been earmarked for the same. Another important objective of the IPO funds are to generate margin for working capital and a sum of Rs. 2450 million has been earmarked for the same.