My Very First Lesson

My first days of equity research, when I had just started to understand greens and reds, bulls and bears, how to study a company thoroughly before making any decisions- financials, balance sheets, news, annual reports and management quality, I stumbled on a very interesting company- 8k Miles Software Ltd.

In June 2014, this stock was trading at about Rs 130, and I started reading about the company. The company is a leading provider of secure cloud solutions and managed services for highly regulated industries and enterprise information technology business transformation solutions. What interested me is the whole space of cloud computing and cloud based solutions, which according to me was a turnaround sector. Social media, data analytics and cloud computing (SMAC) was the sector that interested me the most in my early days of research, mainly because of the kind of potential that it could unfold in coming years. The company had a good client base with the top Indian aviation companies, as well as Ecommerce giants- Amazon, Flipkart etc. I then started looking at valuations and it was trading at a decent multiple, but what intrigued me was the business and the sector. I then started tracking the company stock price, following management interviews, and talking to analysts. Being too early for me to make big investments at a personal level, I decided to pursue this as a case study, instead of as an investment. Later, when it rose from 135 to 250, I thought it’s a missed opportunity and too late to invest. Another mistake. Here’s why.

Here is the price data for the company till 2016.

Month Open High Low Close
Jun-14 135 190 131.95 184.2
Jul-14 185 196 155.3 176.15
Aug-14 170 313.15 170 313.15
Sep-14 330 516.8 303.6 516.8
Oct-14 542.6 804 493.5 736.95
Nov-14 736.95 745.7 479.6 630.55
Dec-14 628 674 493.65 627.65
Jan-15 631.15 923 630.15 677.6
Feb-15 679.5 742.75 648 693.75
Mar-15 690 765.75 585 709.75
Apr-15 711 891 623.75 677.5
May-15 680 727 644 698.75
Jun-15 700 887 575 872.5
Jul-15 865 945 720 814.25
Aug-15 825 1,300.00 825 1,191.75
Sep-15 1,192.25 1,460.00 1,151.00 1,401.75
Oct-15 1,411.50 1,920.00 1,406.25 1,825.50
Nov-15 1,825.50 1,908.00 1,714.00 1,832.75
Dec-15 1,849.00 2,157.75 1,694.00 2,132.35
Jan-16 2,145.90 2,550.00 1,920.00 2,222.00


So the lesson I learnt was that if your investment is good, it is never too late. It wasn’t late when the stock was trading at Rs. 250; not even when it was trading at Rs. 500.



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