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Cameo Wealth’s investment strategy is based on identification and quick execution of low risk- moderate gain opportunities in the capital market. Sometimes these opportunities are driven by corporate events like mergers, demergers, acquisitions and buyback of shares through an “open offer”. We would also focus on companies that announce Bonus issues, Rights issues and Initial Public Offerings (IPO’s).
Generally, we would participate in those opportunities where:
- There is sufficient liquidity in the scrip
- The management is committed and strong
- Where there is sufficient margin of safety
This scheme will not only ensure that investors get to participate and enjoy the returns from IPO’s of quality companies and also corporate actions like Bonus and Rights issues, but also ensures that investors benefit from collective subscription and at the same time don’t have to go through the process of filing in forms and waiting and following up for refunds.
Illustration 1 - Bonus & Stock Split
Shanthi Gears Ltd Announced a Bonus and Stock Split on 24th May 2004. An investor would have gained 403.67% if he had bought the shares and held on to them.
| Cum Bonus Price |
Cost of 100 Shares (Rs) |
Additional Shares - Bonus |
Additional Shares - Stock Split |
Current Price (Rs) |
% Gain |
| 333.55 |
33355.00 |
100 |
2000 |
84.00 |
403.67 |
Illustration 2 - Bonus & Rights
Karur Vysya Bank Announced a Bonus (1:1) and a Rights Issue (1:1) @ Rs. 70/share in October 2002. An investor would have gained 120.59% if he had bought the shares and held on to them.
| Cum Bonus Price |
Cost of 100 Shares (Rs) |
Additional Shares - Bonus |
Additional Shares |
Cost of 200 Rights shares @ Rs. 70 |
Total Investment (Rs) |
Current Price (Rs) |
% Gain |
| 540.00 |
54000.00 |
100 |
100 |
14000 |
68000 |
500.00 |
120.59 |
Illustration 3 - IPO Gains on Listing
| Company |
IPO Price (Rs) |
Current Price (Rs) |
% Gain |
| ENIL |
162.00 |
267.00 |
64.81 |
| YES Bank |
45.00 |
105.00 |
133.33 |
| Sun Bank |
875.00 |
1383.00 |
58.06 |
| Suzlon |
510.00 |
1352.00 |
165.10 |
Target Audience:
Investors who have a 15-18 month outlook on the markets and who wish to take advantage of any of the corporate actions mentioned above can look at investing in Compass. As a special case the minimum corpus for the fund is fixed at Rs 5 lakhs for both resident and NRI clients.
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