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Saved by @Alex1Powell

In this #IPO frenzy market, lets talk (Thread) about some basics around
-Angle/VC/PE
-Allotment process
-IPO Funding
-Grey Market

Hit the ‘re-tweet’ & help us educated more investors (1/n)

 Why do companies come out with an IPO?

(a) Funding needs
- Business expansion plans
- Debt payoff

(b) Non-Funding requirement
- Enhancing corporate stature
- Exit options to large investors like the VCs & PEs (2/n)
While most of us believe IPOs are for funding requirements, you deep dive and understand it’s more of an exit channel for large investors (VC/PE). Let me explain the same concept from a start-up's perspective (3/n)
If u r starting off ur entrepreneurial journey & need capital, how do u raise funds?
-Self Funding
-Friends & Relatives (F&R)
-Bank Loan
-Angel Investor
Angel investors r the 1s who invest @ the idea stage & PE/VC who invest in the growth phase of the company.(4/n)
- Self funding can be the best option but everyone’s not prepared
- F&R I wish helped
- Bank loans need collateral and
- Angel investors invest only when they see scalability in the business and hence a belief that they will get their investments back. (5/n)
Lets assume ur business idea is brilliant, Investors think this is solving a problem & hence this is worth their investments. Lets say after valuation discussions, u part away 20% equity 2 them for their investments, but, how do they make returns on the investments? (6/n)
Unlike a working partner who would take away 20% of the profits/year, Investors r in a bigger game. They don’t remove profits, they can pump cash if required 4 business 2 reaches a point of maturity where investors would like to make the best of their investments by exiting (7/n)
How would investors get exit?
-Some other big investor buys the stake at higher valuation
-Promoters buy back from the investors
-Let many investors buy from the current Investors – IPO, the easiest of all in a raging bull market & hence IPOs become a medium for exit (8/n)
Now, a lot of us have lately applied for IPOs but have not got the allotment right? How does the allotment process for retail investors work?

In case the IPO undersubscribes – all applicants will get full allotment (9/n)
In case of oversubscription,
a) First all applicants will be allotted 1 lot worth of shares each. In case, after allotting one lot each to all applicants, there are still shares available in the retail quota, those shares can be allotted proportionately (10/n)
b) On the other hand, if the applicants are so large in numbers that allotment of one lot is not possible to each of them then role of luck comes in play. Larger the oversubscription, lower the number of stocks that get allotted. (11/n)
Now think of an HNI, what option she has 2 increase her allotment size? Recent IPOs, best case would have got allotment of 1 lot of shares. There comes in the concept 4 IPO funding, financial institutions fund the application of HNIs 2 increase their allotment size (12/n)
The HNI opens a designated bank account with the Lender's/Financial Institution's preferred bank along with a demat account. HNI then issues a Power of Attorney (PoA) granting all operational rights in the favour of the Lender for both bank account and demat account.(13/n)
Depending upon the oversubscription, the lender decides the interest & margin 4m the investor. Margin is the amount the HNI has 2 bring. Generally, the interest is in the range of 8-10% & margin in the range of 0.25% to 1.5%. SBI Cards IPO was an exception where interest was 16%
Look @ the over subscription in Mazagon Dock IPO, whopping 678X & premium on listing was 49%. Due 2 such a high response 2 the IPO, the allotment vs the IPO fund amount came down significantly & this IPO required a listing premium of ~ 132% just to set-off the funding cost(15/n)
If u want 2 make money in leveraged IPO application after adjusting 4 the cost of funding then u need a fusion of reasonable oversubscription & ample listing premium. IPO funding is not as elementary as it appears to be, it eats away the major portion of listing gains.(16/n)
Suggestion - Be ready before the IPO by opening an Overdraft Account where collateral can be MF/Stocks & charge 8.5%. On the last date of subscription (provided the IPO is already decently subscribed), u can transfer funds 4m OD 2 IDFC Bank & apply 4m there under ASBA (17/n)
ASBA is Applications Supported by Blocked Amount. Money in the bank will keep earning 7% & OD will keep charging 8.5%, net differential will be 1.5%. This saving in Funding Cost will significantly bring down the required “Listing Premium to set-off funding cost”. (18/n)
Below chart calculates the return on this basis. In the same Mazagon Dock example where you made a loss of -83.86% using traditional funding route, you make a profit of 8.21% using this recommended route. (19/n)
Lets talk about the Grey market now. Grey Market for IPO is a market where deals are done in-person only among the closed trusted group of investors. These deals are usually facilitated by the broker in neighbourhood and are cash settled on the day of listing. (20/n)
In the grey market, an investor could sell buy/sell IPO shares before the company gets listed on the stock exchange as these transactions are off the market. The premium at which this deal happens with respect to the issue price of the IPO is called Grey Market Premium (21/n)
One can also sell the IPO application (irrespective of whether the allotment comes or not) for a fixed price, this rate is called Kostak Rate. (22/n)
And in case the IPO application is sold in the grey market, subject to allotment only, the deal is called 'Subject to Sauda'. In case the seller of the application doesn’t get allotment, the deal is nullified. (23/n)
To read more about the grey markets, process of an IPO, participants in an IPO and multiple other things, read our detailed blog 'A to Z of IPO' by @stepbystep888 (24/25)
Hope the thread added value :) Hit the 're-tweet' and help us reach more investors.

We have written multiple similar educative threads on personal finance. You can find them as a pinned tweet on my profile or click the link below (**END**)

https://t.co/tBHgTH0Dl4

More from Kirtan A Shah

Kirtan A Shah
Kirtan A Shah
@kirtan0810
A basic primer on the Indian Paint sector

With the listing of Indigo paints, JSW entering the paint sector & now Grasim announcing to invest 5,000 cr in the sector, lets explore,
-Products
-Industry
-Company

Do hit the ‘re-tweet’ and help us educate more investors (1/n)

Lets start with PRODUCTS

India paint industry is broadly divided into two,
(1) Decorative Paints (used mainly in residential & office infrastructure)–75% of the total paints market
(2) Industrial Paints (used in Auto & other industrial uses)-25% of the total paints market (2/n)

Decorative Paints is further classified as
a. Primer & Putty–They r applied 2 the wall 2 fill the cracks in the wall & make it smooth b4 painting. It also gives a lasting effect to the paint
b. Thinner–Its mixed with the paint 2 reduce the viscosity,applying becomes easy (3/n)

c. Emulsion Paint – Water based premium range paint mainly used in metros & large cities
d. Enamel Paint- Oil based medium range paint for smaller cities
e. Distemper–Water based paint mainly for the rural area as it can be used on the wall directly without using the primer(4/n)

(f) Wood Coating – Used to protect furniture against moisture (5/n)
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Kirtan A Shah
Kirtan A Shah
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Does increase in Inflation & hence interest rates lead to a fall in equity? While theoretically yes, practically the last 20 years of data shows otherwise

Please ‘re-tweet’ 🧵& help us educate more retail investors

#Investing

Lets start with basic, y does inflation ⬆️?
Most feel bcoz of higher demand & lower supply but that’s nt the only factor. Imagine there is a shortage of laptops wrt the demand, but there is no liquidity in the market (people don’t have monies) will the price of laptop ⬆️? No

So, Inflation takes place because the demand supply situation is accompanied by high liquidity, people have the monies to spend and hence the price goes up. Inflation does not take place only because of the demand supply gap (3/n)

Its RBI’s job to keep inflation under check. What role does RBI play? RBI is comfortable keeping Inflation between 2-6% currently. So if Inflation is increasing, how can RBI control it? Can RBI do anything to demand & supply? Nothing (4/n)

So the only tool available with RBI to control inflation is controlling liquidity. If RBI is able to reduce liquidity in the market, less money will chase the goods and hence Inflation can be expected to stabilize. (5/n)
FINANCE
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Kirtan A Shah
Kirtan A Shah
@KirtanShahCFP
Personal Finance 101 – My learning’s about investing

This topic is for everyone, whether you manage your money yourself or through your advisor, it will go a long way in managing your finances.

Do re-tweet & help us educate retail investors (1/n)


Subscribe to our YouTube for some interesting educational content around Personal Finance - https://t.co/jvgNEDWiAZ

And you can also join our Telegram channel for regular updates – https://t.co/Ekz6I8pDGt (2/n)

(1) Lets start with Life Insurance

Term Insurance is the best way to take an insurance cover & probably the only product to buy in life insurance. Make sure u disclose all the necessary information before taking the insurance. Smoking, Alcohol, any pre-existing deceases etc(3/n)

Have atleast 10-15 times of your annual income as insurance cover

But there are variants of term insurance that you should avoid (4/n)

(A) Term plan with return of premium

For a non-smoker born on the 1st Jan 1985 & policy term 39 years (till age 75), the regular premium for a 1-cr term insurance is 22,157 (inclusive of GST) but with returns of premium is 42670 (inclusive of GST). An increase of 20,513 (5/n)
GENERICLEARNINGS
Kirtan A Shah
Kirtan A Shah
@KirtanShahCFP
After writing on Banking & Paints, this thread focuses on the 'Logistic Sector'. Idea is to give a small start to the retail investors looking at investing in this space from where they can build on.

This thread covers,
- Macro
- Business Model
- 3PL & 4PL
- Valuation (1/n)

Logistics business macro

-14% of India’s GDP is spent on Logistic
-Organized market is 42%
-Growing at 10-15%
-Employs 2.2 cr
-Achieved Infrastructure status
-FY 14-18 attracted 1,00,000 cr FDI (2/n)

What’s the business?

Logistic is traditionally seen as a warehousing & transportation business where goods, needs 2b transported 4m point A to B using Road, Rail, Ship or Air & can be stored at multiple warehouses before the consumer receives the product (3/n)

The business landscape is changing fast with newer competition and technology is challenging the older business models. 3PL (3rd party logistics) & 4PL is one such change in the business of logistics, will discuss about the same ahead. (4/n)

Listed companies involved in the business may or largely may not own the Trucks, Rails, Aircraft, Ships, Warehouses etc., but uses outsourced services of other vendors and the listed companies manage the logistics from point A to point B (5/n)
SECTORLEARNINGS
Kirtan A Shah
Kirtan A Shah
@KirtanShahCFP
Learn about the STEEL SECTOR in this thread

The demand for steel is generally only 1.2 times the GDP & there is no significant growth in our GDP but still the sector has rallied relentlessly, lets try & understand

Do ‘re-tweet’ & help us educate more investors (1/22)
#Investing

The metal sector is broadly divided into 2,
-Ferrous is a category of metal that has Iron in it, Steel as an example
-Non-Ferrous is a metal, which does not have Iron content, Aluminum, copper, lead, nickel, Zinc etc.
This thread focuses on Ferrous & hence Steel (2/22)

To start, lets understand with how steel is made (its important).
Iron ore is mined, it is then first converted to Iron & Iron is then converted to Steel. There are 3 processes of making steel
-Blast Furnace
-Scrap Metal
-DRIP/Sponge
We will discuss all three (3/22)
ALL , SECTORLEARNINGS , STEELSECTOR

More from Trading

Trader knight
Trader knight
@Traderknight007
A thread on Pyramiding-


What is pyramiding?

In pyramiding we add on to a position when it is going in our direction. Its basically opposite of averaging down.

MOMENTUM - Success of a pyramiding trade depend on this ingredient, the more the momentum the better pyramiding.


There are many way to enter and exit in a stock-

1. ALL IN - ALL OUT
2. ALL IN - SCALE OUT
3. SCALE IN - SCALE OUT
4. SCALE IN - ALL OUT ( I use this one)

Why traders use Pyramiding ?

More than anything what pyramiding do is keep your losers small and your winners - Big.

Pyramiding in my view keeps your dd smaller as your losers are very small because you enters with only a fraction of what you would have entered Normally.

BUT, not necessarily it should be more profitable than ALL IN- ALL OUT, Where one enters all at once and sell all at once.

HOW TO DO PYRAMIDING-

There are various methods which are used by traders for pyramiding ,while keeping the basic concept of adding onto the strength.

1. PYRAMIDING AND TRAILING BASED UPON STRUCTURE-

In this method we scale in or pyramid the qty when the stock breaks above
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Emperor\U0001f451
Emperor👑
@EmperorBTC
Technical Analysis Masterclass- Part 2

'Entering the trade'

Entering a trade without ascertaining a certain things is gambling.

In this masterclass we will learn the pre-requisites to enter a trade.

DON'T ENTER A TRADE WITHOUT DETERMINNG THE FOLLOWING.

Please share.

We understand what reward to risk (popularly called risk to reward) is.
It will be denoted by R:R.

We will also try to bust a few myths about R:R and how to avoid losing trades.

Before entering a trade, you need to determine 3 things.

1. Entry trigger
2. Stop loss
3. Target

1. Entry trigger = Reasons for entering a trade. There could be multiple reasons or a single reason for entry.

Generally a set of reasons AKA confluence is a higher probability trade and a generally a safer entry.

Example of an entry trigger.


2. Stop Loss.

The price in the opposite direction of the trade where the trade is exited, at a loss.

At this level, the reason for the entry becomes invalidated according to TA and the price can then move in the opposite direction, probabilistically.


3. Target is the possible price level that the asset might touch based on previous trends or confluence AND where a possible reversal could occur.

Target is the next path of least resistance from where the price might reverse.

We will always ONLY use TA to determine all 3.
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Sarang Sood
Sarang Sood
@SarangSood
THREAD ON DELTA (The most important GREEK)

Many traders don't indulge in understanding GREEKS because they think they are very complicated.

There are 4 primary greeks:

Delta
Gamma
Theta
Vega

In my experience, understanding DELTA is enough to take benefit of greeks.(1/n)

Delta measures the rate of change of options price based on the directional movement of the underlying.

So this means we can know in advance (theoretically) how much an option will move with the underlying & so we can prepare our strategies accordingly. (2/n)

Value of delta varies between 0 & 1 for calls and -1 & 0 for puts. This figure tells how much an option price will change, when the underlying moves 1 point. So example a delta of .2 of call indicates that for every 1 point change in the underlying, the price will move .2 (3/n)

For option writers who want to trade in neutral strategies like straddle, strangle, ratios, calendar etc, delta can be very helpful. So be it any complex strategy, knowing the NET DELTA can give you an idea of how your strategy will perform in different scenarios. (4/n)

Net delta is just the sum of the deltas of all the bull options (call+ & put-) minus the bear options (call- & put+).

So if we can track this, we will always be in the know of how much exposed our position is. It makes it easier then to adjust our position. (5/n)
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Investment Books
Investment Books
@InvestmentBook1
As part of our Knowledge sharing initiative by @FinnacleAcademy and @Investmentbook1, here we are on our post 2 with some of the most important key takeaways of the book “Masterclass with super investors” by @vishalmittal22 & @basrars

Here we go! (1/n)


Masterclass with super investors is one of the best books covering the investment strategies & journey of renowned domestic investors. Our summary has been segregated in 2 parts, A) Common traits in investment ideologies of these stalwarts B) Investor specific key takeaways (2/n)

A)Let's look at a few common points in these Stalwarts' investment ideologies 1)Invest (higher % of portfolio) when you have conviction backed by sound logic 2)You need to be bullish on India to make investments in Indian cos. bcoz majority of Indian cos. are domestically focused

3. New Bull markets have new leaders when a bull markets ends the stocks which have gained the most falls the most 4. The entry price that you pay for a company should be very cheap so that even if your assumptions go wrong in future you don't end up losing money (4/n)

5. We get attached to stocks which have given us a lot of returns in past even though in current & future expected scenarios they seem overvalued 6. Focus on art of disciplined selling-it's imp. to have a sound selling mechanism just buying at right price wont create wealth.(5/n)
TRADING
Robot James
Robot James
@therobotjames
In my 20 years of trading I have noticed this cycle play out again and again with traders that "make it":

1. Overconfidently reach for returns
2. Get humbled by the market
3. Simplify + concentrate on clear, high probability edges.

1/n

Nearly everyone starts with a lack of respect for how hard it is to consistently make money trading.

That leads them to pass over high-probability sources of returns in favor of more marginal ideas.

Or they overcomplicate the trading of a good edge.

2/n

Here's an example...

It is 2015. You look at a simple strategy.

You hold an equal dollar exposure to:
- Cap Weighted US Stocks (VTI)
- 20+ Yr US Treasury Bonds (TLT)
- Gold (GLD)

And rebalance each month.

(I've extended back a bit with mutual fund prices.)

3/n


It made money consistently with a few blips.

You'd have 4x your money from 1997 to 2015.

It makes sense. It's harnessing two big sources of risk premia (equity + duration).

It diversifies across 3 macro assets that tend to outperform in different econ environments

4/n

But, naturally, you turn your mind to how you could do better...

And here is where it gets dangerous!

There are good ways to try to "do better", and there are bad ways to try to "do better".

5/n
TRADING

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Sri Devi Karumariamman mandir, Chennai, Tamilnadu

Sri Devi Karumariamman mandir is in Thiruverkadu, a suburb of Chennai. It is said that God Muruga came here and obtained the 'Vel' (spear) from His mother, Goddess Karumari (an avatar of Parvathi) 1/n


to fight the demon Suran and hence this place was called as 'Vel kadu' and became as Verkadu. As per legend Devi Karumariamman once disguised as a soothsayer visited Bhagwan Surya, the Sun God, to predict His future. 2/n


Not realising that the soothsayer is none other than Sakthi Matha, Surya ignored Her. Angered by his indifference, Devi Karumariamman immediately retreated. Bhagwan Surya lost His glory and the earth plunged into darkness. 3/n


Bhagwan Surya then realised His folly and pleaded forgiveness from Devi Karumariamman. In order to pacify mother Karumariamman, Suryadev said that His rays would fall on Her directly twice in a year and touch her feet. (in the month of Panguni (March- April) & during (Sep - Oct)


Mother Karumari Amman is worshipped here in two forms.A swayambu (self manifested) with only head visible above the ground and another one in a graceful sitting posture with all Parasakthi features,with four arms holding skull, sword, trishul, udukkai (damru). 5/n
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Hector Navarro
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I'm going to attempt to chronologically list all of the Marvel characters Stan Lee had a hand in creating. Working with his genius collaborators, Stan and his team produced an insane amount of iconic characters in a roughy ten year period. (Thread)


With his younger brother, writer Larry Lieber, and Jack "the King" Kirby:

Groot

Tales to Astonish #13 (November, 1960)


With writer Lieber, and artist Kirby:

Fin Fang Foom

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With the King, Stan gives birth to the Marvel Universe:

The Fantastic Four

Fantastic Four #1 (November, 1961)


With Jack Kirby:

Mister Fantastic

Fantastic Four #1 (November, 1961)
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Reshu Nath
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'Tera mera rishta kya, hindu, hindu,hindutva' is a clear take on 'tera mera rishta kya,la ilaha illallah'. As much as Hindutva hates the monotheistic religions especially Islam, there's a strange wistfulness and subliminal need at display now, to BE that they hate. 1


Charlie Hebdo doesn’t come up as a cautionary tale now but rather 'why cant we be like that'?
Growing up, Hanuman was an adorable deity for us, who swallowed the sun, or who couldn’t figure out what was Sanjeevani booti so he picked up a whole mountain and came back with it. 2

Or he was loyal, admirable and when he cleaved his chest, you saw both Ram and Sita. Now we have a lot of “Angry Hanuman” stickers. Why is a cute childlike God angry? We don’t know. It's a convenient blank space where to paint all the angst of Hindu Khatre mein hain narrative. 3


The other strange thing that has started happening is pictures of Ram appearing sans Sita. “Jai Siya Ram” has become “Jai Shri Ram”. Some people disingenuously explain it as being the same thing - because Shri is a name of Lakshmi. Not really. Siya is an apbhransh of Sita. 4


Shri is a prefix of respect in this case. Hinduism is being militarised. A woman/Sita has no place in it. Even the militaristic Goddess that is Durga has no place in this conception of neo-Hindu divinity, as evidenced by Dilip Mandal wondering where Durga came from. 5
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@alexstamos
The entire discussion around Facebook’s disclosures of what happened in 2016 is very frustrating. No exec stopped any investigations, but there were a lot of heated discussions about what to publish and when.


In the spring and summer of 2016, as reported by the Times, activity we traced to GRU was reported to the FBI. This was the standard model of interaction companies used for nation-state attacks against likely US targeted.

In the Spring of 2017, after a deep dive into the Fake News phenomena, the security team wanted to publish an update that covered what we had learned. At this point, we didn’t have any advertising content or the big IRA cluster, but we did know about the GRU model.

This report when through dozens of edits as different equities were represented. I did not have any meetings with Sheryl on the paper, but I can’t speak to whether she was in the loop with my higher-ups.

In the end, the difficult question of attribution was settled by us pointing to the DNI report instead of saying Russia or GRU directly. In my pre-briefs with members of Congress, I made it clear that we believed this action was GRU.
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