Acquisition faux pas

Looks like the corporate bigwigs are on a shopping spree again! Aditya Birla Fashion has been busy acquiring companies left, right, and center - TCNS Clothing and Godrej Consumer are their latest grabs. And let's not forget about Godrej's recent acquisition of Raymond's consumer care business. Did anyone even know they owned Park Avenue?

But let's face it, folks - the track record for acquisitions isn't exactly a success story. Sure, a few have hit the jackpot, but most end up belly-up. And why is that? It all boils down to the price tag, baby! When companies get too caught up in their goals, they forget about the old valuation. And while it won't necessarily sink the ship, it's gonna leave them feeling like they paid full price for a half-eaten sandwich.

So, next time you're considering an acquisition, ask yourself: "Is it really worth the dough?" If not, get ready for a bumpy ride. Now, let's move onto the memes!

Now, I'm not saying it's a substitute to any big qualification but the sheer amount of knowledge you can gain is simply beyond amazing. Do read if you are an investor.

We've all done it. We have all dreamed of a rich life after seeing a small gain in our portfolio. There's nothing wrong with dreaming but its not the only thing we should do.

At a price of Rs 97,500, the company should distribute dividend of Rs 975 per share just to have 1 per cent dividend yield. So if you are a dividend investor, now you know where not to look at.

This is when we do unnecessary things and add burden to our portfolio. Yes, diversification is needed to some extent but that doesn't mean you should add 100 stocks. Continued in the next meme.

As we were talking, even if you have less number of companies but if they are well-analysed and bought at a good value, then no need to worry. Overdiversification will also drag returns.

Almost all of our dads have done this. It's either an FD or a piece of land in a remote corner. Yes, the land bought for Rs 1 lakh sells for Rs 5 lakh after 20 years but the returns? Nowhere to be seen. Don't even get me started about the taxes.

Yes, revenue did increase and even at profit before tax level, there was significant growth but what made the difference were these tax credits. If not for them, profits would have actually fallen on a YoY basis. Another reason why you should not blindly believe the headlines and actually check the results.

If you are a value investor, ups and downs are part and parcel of the returns you get. Yes, there may be times when some investors will enjoy profits by investing in trendy companies, but it doesn't last long.

To give a picture of how good and bad Symphony has been - in the last five years it has given -13.5 per cent returns. But it performed so well in the five years before that that its ten year return is still more than 18 per cent!