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Wednesday, April 22, 2009

Operators paradise:-Stay away from these craps

As usual our maestro hemant guptaji penned some amazing notes on craps.Heres the same for you people.

Scripscan:Gee Kay Finance& Leasing Company Ltd

Story:Here is an investment company with no business activities at present and equity of Rs4.97 crore. What should be the share price of this company? Maybe Rs2 or Rs3. However, look at the price at which Gee Kay Finance is currently trading. The story behind the stock price of Gee Kay is that it is in the firm grip of an operator who specialises in ramping up share prices of shell companies. This operator is learnt to be providing a kickback of up to 20% to those who arrange buyers for his counters. He is also learnt to be taking big investors for a ride under the garb of margin funding. The modus operandi? Approaching big investors with ready money, giving them 20%-30% payment (as collateral) to avail of full funding against the pledge of the shares of the counter that he ‘handles’. The provision of margin money provides the much-needed aura of genuineness to the entire operation. However, the operator seldom comes back to the financiers and, as the scrip starts hitting the lower circuit, the financiers fail to exit and are stuck with huge quantities of the stock. This is similar to what had happened to KLG Capital and JPT Securities earlier. KLG went right up to Rs563 and later crashed to Rs45 and JPT zoomed to Rs353 but collapsed to Rs35. Investors are advised to stay away from Gee Kay Finance as, sooner or later, this counter too is bound to start hitting the lower circuit.

2)Scripscan:Trinethra Infra Ventures Ltd

Story:This Hyderabad-based company listed on the BSE very recently. Its name is a misnomer as the company is into construction of residential apartments only. Moreover, it does not have any land bank. For the nine months ended December 2008, its PAT was Rs1.67 crore on equity of Rs6.46 crore translating into an EPS of Rs2.58.It has doubled its equity to the current level by allotting shares to investors who are cohorts of promoters, though these are classified as non-promoter holding. As the company has a low floating stock, it has been easier to maintain the share price at a high level so that promoters can dilute their holdings at a premium. The company has made announcements that it will be constructing three-star hotels at a time when the hotel industry is in the doldrums.

3)Scripscan:Sunteck Realty Ltd

Story:The share price of this realty company defies explanation. For the third quarter of FY09, it reported a negligible income of just Rs21 lakh but boosted its overall financials by reporting other income of Rs5.38 crore resulting in profit after tax of Rs4.55 crore. What is the nature of its other income? No information is available. Its tax provision was just 8% of its profit before tax, raising doubts about the genuineness of the financials. Sunteck has merged a couple of companies with itself, one of which is Satguru Corporate Services. According to our sources, the floating stock is negligible and the scrip has been ramped up by a very resourceful Mumbai-based operator. This operator is rumoured to be getting a complete list of his buyers and sellers on a daily basis which enables him to plan his operations thoroughly. Another skill of this operator is his ability to plant big and fake announcements in the media. This helps create buying interest for the counter enabling an exit at a high price.

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