Haphazard Linkages

During dreary journeys across the market landscape scouring for interesting opportunities, the investor occasionally stumbles upon an oasis. Of extreme anomaly. The sighting is generally a mirage, a ray of false hope; but in some instances, the manifestation is very real and extremely intriguing, especially so when the anomaly manifests across companies operating in the same business. The anomaly was first highlighted here (' Over-priced anomalies in bear markets '), when discussing One Life Capital Advisors (Bloomberg: OCAP IN) . Extreme pricing is generally either an outcome of mass euphoria/fear, or a flock of informed market participant presence. OCAP IN seemed to be in the latter category. The post also highlighted the case of peer, Brescon Corporate Advisors (Bloomberg: BFS IN) , as an example of under-appreciation.  For brevity, the scheme of things as on the date of writing (Dec '11) is reproduced: Such cases of extreme pricing always pique my inte...

The catalyst that turns fantasies into realities came in the form of this SEBI order for OneLife Capital Advisors (covered here ).  SEBI (Indian market watchdog) barred this company, several others and the merchant bankers to these initial public issues from accessing the securities markets. SEBI accused them of diverting IPO proceeds, performing shoddy due diligence and aiding promoters to prop up prices post-listing. Unsurprisingly, in the beginning of the end scene, OCAP IN is down 15% as of this writing. A pummelling, rightly deserved. The end would be interesting.  HaLin rued their inability to initiate Shorts on such cases, in the previous post.   The Shorts are common whipping lads when markets and companies come under fire. The chorus against Shorts is inversely related to (1) market levels/stock prices, and (2) the acceleration of the fall from grace. Shorts are blamed for disrupting markets, for acting on misplaced rumours, for cornering poor and gentee...

One of the alluring things about investing is the prospect of rare sightings of anomalies. In a torrid market, typically, the universe of value Longs tends to expand relative to bull times. The opposite - an anomalous over-pricing in certain pockets - is rarer. One such example is OneLife Capital Advisors Ltd ( Bloomberg: OCAP IN; "OCAL" or "Company"), a recently listed Indian  company engaged in providing  financial intermediary services, an  aspiring equity broking franchise and portfolio management services company.  'Aspiring' is the operative word, as OCAL was incorporated in 2007 and commenced business in September 2009. As the Company admitted, there is little to look at in their limited operating history. Nevertheless, market participants enthusiastically bought into the Company's prospective story. Overall IPO was subscribed 1.53x, with retail participation at 2.5x allotted portion and Institutional interest at 1.02x.   ...