Anyone got a grown-up framework for pricing chaos? Specifically: how do you value a company like Unitech when the “business model” seems to be litigation bingo, asset monetization someday, and upper/lower circuits doing the Macarena?
I’m trying to build a checklist for situations where a legacy realty stock with legal overhang suddenly wakes up from its coma and sprints. My inner value investor says, “assets minus liabilities,” while my inner realist says, “good luck finding the real share count and who actually owns what.” Meanwhile, the stock chart is politely screaming.
Questions for the hive mind:
- Optionality vs. wipeout: Do you treat this as a call option on a turnaround with a high chance of zero, or try to anchor on liquidation value after court-directed resolutions? What inputs matter most?
- Capital structure fog: Any reliable way to map current paid-up equity, potential dilution (preferentials, warrants, debt-to-equity), and promoter pledges when disclosures are… aspirational?
- Court orders to cash flows: Tips on reading legal orders to translate “committee to oversee project completion” into actual timelines, cash burn, and equity recovery (if any)?
- Trading mechanics: How do you avoid being trapped by UC/LC chains in T2T/ASM/GSM land? Any rules for entries/exits when liquidity is a rumor and the bid-ask is a canyon?
- Position sizing: What’s a sane max allocation for “legal/turnaround lottery tickets” so a portfolio doesn’t cosplay as a bankruptcy court?
- Precedents: Learnings from other relistings/turnarounds where equity survived (or didn’t). What were the red flags that mattered ex-ante vs. noise?
- Taxes and dead money: If you get stuck for months due to suspension, how do you plan around tax-loss harvesting and capital gains timing?
- Reality check: For realty names with court-supervised project completion, is equity value basically a rounding error until creditor/homebuyer claims are satisfied?
If you’ve built a repeatable process here, please share. I’d like to stop making donations to the “Upper Circuit Enthusiasts Club” and start acting like I’ve met a balance sheet before.
