**READ THE UPDATE TO THIS POST BELOW.
This was my latest stock pick. The company’s called Satyam Computer Services Ltd. It was trading at a good $12 or more all year and up until recently (actually it was even higher between $20-30 all year until the recent melt down). However, it wasn’t moving down until literally a day or so ago when they announced they were going to take over a couple other companies (that the management had family ties to). It then dropped to less than half to about $5 or a bit more.
The financials are awesome though. It’s flush with over a billion in cash and looks good with it’s product line basically providing IT/Computer Engineering services throughout the world. After the investors got angry at the announcement, the management decided to back out of the deal. So, the argument that the cash being diluted and the management making a crazy decision disappeared within hours. So, it should be worth $12 or more, right? Well, it shot up more than $2 right away giving it more than 40% rise right away. Us individual investors couldn’t get in on the initial jump unless we have access to after hours trading, but I still decided to buy at $7.50 and already gained a buck a share. I’m thinking it should go to $10 or so where I may exit. We’ll see…
The financials are strong…the management is just a little shaken up and so are investors, but if people can shake this off, it has at least another $2-5 more to move up which at it’s current price being $8.50 would be a healthy short term gain.
Update: After investing in this, the stock dropped over 90% because the CEO came out and admitted falsifying his books. This company is now referred to the Indian Enron. Now, I know what it feels like to be an Enron investor. The business still seems decent, but the fact that the management was very unethical though really shows me that investing can be like gambling. It also shows me that the Indian system of auditing and/or the auditors of Satyam PricewaterhouseCoopers are both very weak — can’t believe PWC had no clue. What’s the use of an auditor?
**Please note: investing is risky. Any investing decisions based off my advice and information is for you to risk. I can’t be responsible for any amount of money you spend on any of the advice or tips I give. I just see it how it is and write it here. I personally have put my money at risk. However, it doesn’t mean you should. If you do gain though, I’m happy for you! 🙂