How much to believe in Share Buyback?

Shares Buyback - Does it work for investors?

"the data indicates that of around 70 buybacks in FY19, 75 per cent have under-performed Nifty 50 and 60 per cent have under performed Nifty 500."

Further, 45 per cent have given negative returns. A good example is McLeod Russel which, in FY19, announced a buyback of 4.35 per cent of its shares is down by 90%.

It is fashionable for few companies to announce a buyback when prices go low to boost the share price. But, few does not mean to fulfil that.
PC Jewellers has announced a buyback but could not fulfil when Banks has not given NOC.

So, do not rush to buy stocks when you see share buyback news. It may work for intraday traders and BTST traders but not for everyone. As a retail investor, look at fundamental of stocks more than anything else. Buybacks, promoters buy etc are just add little weightage to many many criteria you should look before you initiate a buy call.

In bull market, buybacks and small buy of shares by promoters happen just to boost stocks price by Chor promoters.

Read: Why all stock buybacks are not a buy signal

Has Value Investing stopped performing?

Value stocks in the U.S. have lagged growth since early 2007, a brutal and rare 12-year stretch of underperformance.

Value stocks as measured by P/B ratio trailed growth by a crushing 5.5 percentage points a year from April 2007 through May. Other measures of value fared better but also fell behind. Using P/E ratio and P/CF ratio,value lagged growth by 2.1 percentage points and 2.6 percentage points a year, respectively, over the same period.

There are already some popular theories why Value Investing is lagging.

One is that value investing has become too popular. Once the value premium was discovered, the theory goes, investors piled into value stocks and squeezed the premium away.

A second theory is that growth companies are more dominant than they used to be. Their vast technological edge and near-monopolistic powers, it is said, will allow them to outpace value companies for the foreseeable future.

A third theory — and the most generous to value — is that the measure of value is broken, not necessarily the strategy itself.

P/B ratio is widely used by researchers and indexes to identify value stocks, but some complain that book value no longer captures the full value of intellectual capital and other intangible assets of fast-growing companies such as Amazon, Google and Facebook, making them appear more expensive than they truly are.

Source: Don’t Count Out Value Investing Despite Growth’s Spurt

Cash Conversion Ratio or Cash Conversion Rate

Cash is king so we need to know if companies are earning cash or not!

Here I have found a very easy explanation of Cash Conversion Ratio so thought to share with you.

The Cash Conversion Ratio (CCR), also known as cash conversion rate, is a financial management tool used to determine the ratio of the cash flows of a company to its net profit. In other words, it is a comparison of how much cash flow a company generates compared to its accounting profit.

Cash Conversion Ratio = Cash Flows / Net Profits


For more detailed explanation head here.

My creation of Ratio on Screener.in with Explanation on one of them.

Cash Conversion Ratio with Explanation

GoodRead: Buffett and Munger's problem with value investing

Value investing is about estimating and valuing future cash flows, not about how low a Price to Book or a Price to Earnings ratio is for a stock.

As Charlie Munger pointed out, all investing is value investing, in the sense that you expect your investment to be at a higher value when you sell it. This makes investors jobs much harder. 

Read: Buffett and Munger's problem with value investing


and, this is not related but another Food for though

https://myinvestmentguide.wordpress.com/2015/06/12/9-steps-to-value-investing/

Navkar Corp - increasing capacity by 234%

Navkar corp - increasing capacity by 234%.
It says target of Rs 265.
CMP 171 after 13% increase today.

Top 10 stocks handpicked by experts to buy in FY19 which can give up to 40% return

This is the note I have made somewhere which I tumbled today. It was so lucrative business highlight that made me think about it. I read that description again on the above link which is very very attractive. Anyone can fall for it.But, when I checked today, then I felt good. I have not invested here. From Rs 171 at that time to now Rs 39. It is just at 22% now from that time.

Why did not I have bought I do not remember.

Stock Market is very tough and experts are not immune to it.

What minimum RoCE should be look?

How is this?

ROCE should be at least double the interest rates.

While ROCE is a good measure of profitability, it may not provide an accurate reflection of performance for companies that have large cash reserves, which could be funds raised from a recent equity issue.

RoCE = (EBIT/Capital Employed) * 100.


Spotting profitability with return on capital employed
Return on Capital Employed
RoCE vs ROI(c)