Reliance: Caution Ahead!

Can u rely of reliance? This is the question many people in the Market are starting to ask. Reliance has always been the stock in limelight, starting from the days of late Dhirubhai Ambani. Then the war between the brothers and excessive marketing made reliance a household name. People started speculating on whether Mukesh Ambani controlled business would be more profitable than ADAG (Anil's Cos) of vice-versa. But it was very shocking to see both brothers doing very well, at least in the stock market.

Fortune Favors the Brave!

Both brothers have consistently featured in the Fortune Magazine list of the richest people in the world. And according to the march 07 figures Mukesh was 12th richest and brother Anil at around 17th. All this changed with the stock market bull run. Now according to times Mukesh is the Fourth richest person in the world with $ 50 billion (Sept figures) just behind Warren Buffet $ 52 billion and Bill gates $ 57 billion and Carlos Slim $ 58 Billion (Aug figures). The combined wealth of the brothers (/family) stands at $ 80 billion, making them the richest family in the world. Amazingly Both brothers achieved this feat (journey beyond $ 1 billion) in only few years after the death of legendary Dhirubhai. Now the challenge for them is to stay in the top spot for a long time, remember Amiz Premji of Wipro, he became 3rd richest and was thrown out of position shortly within months.

Bubble?

I was amazed to see six Reliance companies in the top 10 companies by turnover in the NSE site. When i probed more i found out that earlier this year only two were present in a similar list. (see the chart below or click on the links for more detail on Year ending Mar 07 ; and Sept figures).



The recent surge in Reliance is making me worried about the valuation of these companies and the overall market (bec of high weight age of Reliance in stock market). Just few days ago one of my friend was justifying R Energy's PE of 40! I just couldn't belive that this was a power company. All this makes me believe that Reliance is cooking up something. Or maybe this is just a beginning of another era! This will be the difference between :

Reliance = Rely + alliance and
Reliance = Real + lying + alliance

Mega Charity Fund Created

Warren Buffett just hours ago held press conference with Bill Gates and Melinda Gates pledging to donate $37 billion or 85% of his total wealth ($44 billion) to charity. Majority of this charity would go to Bill and Melinda Gates Foundation and the rest to other four foundations.

The philanthropist Buffett in his usual style commented that he is good at managing money efficiently and for charity the Gates Foundation can do a better job. This comes from the man who refused to invest in Tech Companies during the Tech Bubble of late 90's saying that, "I do not understand the business of tech companies; I understand insurance, that is why we have invested in insurance companies." The total fund of Gates foundation is doubled by the pledged charity made by Warren Buffett. The money would be raised by selling of the Berkshire Hathaway shares that Buffett owns. The Oracle of Omaha further stated that selling of shares would not affect Berkshire Hathaway negatively. Infact he believes that selling of shares would increase the liquidity of the company.

Buffet had already made it clear that after his and his wife's death all of his wealth would go to charity. During the press conference one italian reporter asked why doesn't he leave the wealth to his children. Buffet philosophically replied that, "I do not belive in creating dynastic wealth". Later he added that, "I would like my children to only have enough money so that they can do something not so much money that they do nothing."

CNN reporter acclaimed that "What difference would this money make is about to be seen, but it certainly is a lot of money."

Interesting News

A chance to dine with billionaire investor Warren Buffett drew bids as high as $455,100 US yesterday in the first hours of a charity auction run by eBay Inc.