Small cap stock surges 8% after Dolly Khanna picks up stake
Summary
- According to a filing, Khanna took a stake of more than 1% in Selan Exploration Technology, an oil & gas exploration and production company, during the March quarter.
Every quarter, investors that hold more than 1% in a company must share their portfolio moves as part of their filings.
These filings can be goldmines for retail investors, providing unique insights into recent decisions made by some of the best money managers.
Let’s look at the first such update for the quarter ended March.
Today at a glance:
- Dolly Khanna’s latest stock pick.
- Key factors that support this oil exploration company’s growth.
- Implications for YOU, dear investor!
- Should you replicate the buying/selling decisions of super investors?
A word of caution at this point seems in order – blindly replicating the trades of the so-called ‘smart money’ is a recipe for disaster.
While these super investors present a fascinating world of high returns and dynamic strategies, it's crucial to understand their approach and costs.
Coming back to Dolly Khanna’s latest stock pick, shares of this oil exploration company surged over 8% on Friday last week after it became public that Khanna had picked up a fresh stake in it during the quarter.
Who is Dolly Khanna?
Khanna is a Chennai-based investor who is known for picking lesser-known mid caps and small caps. She has been investing in stocks since 1996.
Khanna's portfolio, managed by her husband Rajiv Khanna, is usually inclined towards more conventional stocks in manufacturing, textiles, chemicals and sugar.
Which stock did she buy and why?
The stock in question is Selan Exploration Technology, an oil & gas exploration and production company.
According to its latest filing, Khanna took a stake of more than 1% stake in the company for up to ₹81 million during the March quarter. Our smart money tracker shows Khanna holds around 1.03% in Selan Exploration.
While we don't know why she added shares of Selan Exploration, here are some possible reasons.
#Merger with parent company to boost growth
In September 2023 the company’s board approved the merger of Antelopus Energy Private Limited and Selan Exploration Technology.
The merger was aimed at diversifying the company’s portfolio across multiple sedimentary basins, both onshore and offshore.
Selan Exploration filed for the merger back in November 2023 and is currently awaiting the market regulator’s approval.
#Consistent improvement in earnings
For the past few quarters, the company has seen consistent improvement in sales metrics which has helped improve margins.
Oil exploration companies like Selan Exploration have been in focus ever since Brent crude prices topped $91 per barrel last year amid fears that the Israel-Palestine war may expand to neighbouring countries.
The company is currently debt-free.
What’s next?
The company has several activities planned in the coming quarters.
It has production sharing contracts (PSCs) with the government of India for the Bakrol, Lohar, Ognaj, and Karjisan fields. It has also signed a long-pending crude offtake and sales agreement with Indian Oil Corporation, which is the government’s nominee as per the applicable provisions of the PSCs.
The company’s strategy to interconnect the gas pipeline between Bakrol helps monetise gas reserves and reduce flaring of gas.
There have also been ongoing discussions with potential gas buyers for offtake of gas.
The recent QIP is expected to result in steady operations. In January 2024, Selan received approval to launch a QIP for an amount not exceeding ₹250 crore.
How the stock has performed recently
In the past five trading sessions, Selan Exploration share price has rallied over 13%. In the past year the stock is up around 94%.
Selan Exploration hit a 52-week high of ₹592 on 20 February 2024 and a 52-week low of ₹251 on 25 April 2023.
Selan Exploration stock
Here’s how Selan Exploration stacks up against its peers.
Conclusion
Blindly replicating the decisions of the so-called investing gurus has some drawbacks:
- Offers a partial view.
- Can be dated, as they can be submitted up to 90 days after the quarter ends.
- Filings omit short positions and cash reserves.
Sure, these individuals have teams diving into every detail of a company, but that doesn't mean you don’t need to do your homework.
Read about your investments, stay updated, and trust but verify.
Use these filings as a starting point as they can offer great insights.
That’s it for today.
Stay healthy and happy investing!
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com
