That is one hell of a scammy title!! That is also how I felt after stumbling upon this video:
But being open minded I clicked and watched it. Also, Having read Peter Lynch’s book I knew that buybacks were a good thing and companies who do this must be prospering. So, I immediately got interested.
I found that there are two categories for applying for a buyback
- For small investors (small refers to portfolio size and not investor’s size): whose total value of shares do not exceed 2 lakh
- Other investors: whose total value of shares are more than 2 lakh
At the time I watched that video (20-25 June), TCS was selling at 1815-1820 So, I figured if I buy 95 shares and was to tender my shares for buyback at 2100 I could be making anywhere around 26500Rs. Also, since I have two trading accounts, one in my name and other in my father’s name, if I buy another 95 shares I could be making 53,000 of total profit.
I gained more information on the buyback. How to participate in it, What is “Record date”, what is “acceptance ratio” etc. I found this nice video in which Anil Singhvi of CNBC Awaaz explains everything about a buyback
I found that TCS had done a buyback in 2017 too. That buyback had an acceptance ratio of 100%. Meaning that 95 out of 95 shares that you tendered got accepted. I also found that retail participation was only 49% of the reserved quota for this category. While for ‘other category’, it was 252%!!!! (You can also see this from this link On the left-hand side under “Details of BuyBack” ) This explains the acceptance ratio of 100%. People are not aware of this opportunity or they are not taking advantage of it.
I was now determined to participate in it. I had missed 2017 one, but now I won’t. I immediately bought 95 shares from my account at 1813 per shares. I had to arrange funds for my father’s account, this took around 5-6 days by which it had gone to 1880. Desperate, I bought another 95 shares for 1880! My average price for 190 shares worked out to be 1846.
As of this writing, the current share price of TCS has reached 1990Rs. So, my total gain is around 27000. I could sell and bag this 27000 or I could wait for the buyback to get the full benefit of 48000. I decided to opt for the latter.
What an amazing thing it is! Isn’t it? I couldn’t believe what I’ve done. This whole exercise didn’t take much work. Just a couple of hours to research. If all my shares get accepted, which I am pretty sure will, I would make 48000+ with negligible work.
I remember one of my friend working at a private school where her salary was 4000Rs./ month and she had to work for 7 hours a day. Teaching and handling small kids while standing all day. And this didn’t even include the work that she had to do in her home like checking copies etc.
So, I will make 48000 Rs. equivalent to her entire salary for a year in just 5 minutes (It took me only 5 minutes to transfer funds and buy shares). No teaching, No long work hours, No kids, No nothing!!
Now, I have started to understand what Robert Kiyosaki was trying to say in his book Rich Dad Poor Dad. The Rich do not work for money, they make their money work for them. They invest in their financial education and they make money smartly!!
I am so glad I read that book and more importantly took decisions which allowed me to apply his teachings in my life. It definitely pays to be open-minded. I just had to click the above video. Had I not clicked it I will have missed earning that 48000 Rs. and this wonderful story to tell the world.
Thanks for reading! You can also participate in this buyback if you have money (and guts). Still, you can make 10000. If you want any of my help feel free to comment below or contact.