The difference between Stock Splits and Bonus Issues

Earlier this month, Yes Bank shares climbed 1% on news that they would consider a stock split in their next board meeting. On July 21st, Reliance Industries Limited announced a 1:1 bonus issue in it’s 40th AGM. If you’ve been investing in stocks for any length of time, you’ve probably come across such announcements from time to time. Both of these result in existing shareholders of the company getting additional shares. So, what is the difference between stock splits and bonus issues? First, let’s look at what’s NOT different between the two: Number of Shares Outstanding: Both stock splits and

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Guy Spier’s Eight Rules for Value Investing

I just finished reading Guy Spier’s “Education of a Value Investor: My Transformative quest for Wealth, Wisdom, and Enlightenment“. The author first made news when he and Mohnish Pabrai bid $650,000 for one lunch with Warren Buffett. This book talks about what led to that lunch and what he learnt from it. More importantly, it’s a tell-all autobiography of how he went from the often subtly, sometimes blatantly immoral world of investment banking to setting up his own fund, modeled on the principles espoused by the legendary Buffett. In the process he provides an unvarnished look into the arrogance, hubris and insecurities that stem from

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IPO: Imaginary Profits Only?

At a glance IPOs or Initial Public Offerings occur when a company “goes public” by raising money from the broader market in exchange for a percentage of ownership Higher the price at which they offer each share of their enterprise, higher is the overall valuation of the firm and in turn the business promoter’s networth Historical data suggests that the number of IPOs increases as markets approach historical peaks A large percentage of companies see significant corrections from their IPO prices which makes it extremely difficult for an investor to make positive returns while investing in IPOs The calm investor

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