This is a story about a lucky and intelligent person who used his fortunes in stock market to buy a hotel.
I cannot remember the name, year , exact figures, location etc.
About 2 or 3 decades ago, Colombo Dockyard was mostly owned by the Govt. and they sold a part of it to a Japanese party to bring them into the management. Rest was with the public, trading in CSE .
As I recall, it was trading @ 15/- or around 20/-.
One morning, we got a news; to expand its capacity, they announced 4 rights @ 10/- for 1 existing share.
That means, if you had 1000 shares by investing 15,000, suddenly you had to find money for 4000 rights @ 10. ( 40,000/-)
Reacting to this news of big dilution, share price dropped to 10/-.
As in the SAMP case people started shouting everywhere. ( Fortunately no blogs those days :-) ) Expecting further drop, many retailers panicked and rushed to sell their holding at least @ 10/-
Rights issue was not successful , as everybody expected.
The person I wanted to highlight here was a novice to the market, had 500 DOCK shares. As such, his entitlement was 2000 rights.
Acting in contrast to most of the experienced players, he applied for 40,000 additional rights in addition to his entitlement. By doing this, he expected to get at lease 10% , i.e. 4000 additional shares and get a return of 20% within few months.
He had about 4 laks of Rupees with him and he used it in entirety to secure higher percentage of additional shares.
Actually he wanted to invest only about 50,000 and expected to receive the balance when they reject most of his request.
Unexpectedly, they gave him everything !. As many people had not executed their rights everybody was given all they asked !.
Now he is trapped and all the money he had was 'DOCKed' in CSE. !
Meantime, another interesting thing was happening. The Japanese investor / ship builder who had some good number of shares and had engaged in the company work has also expressed his willingness to buy all the rights unsubscribed by Sri Lankans. The transaction was done accordingly.
Now all of sudden, DOCK became a 'Japanese' company. !
The news spread. Hopes and talks of better management, New technology, worldwide orders...etc ...
Within 2 weeks the share price went to 18. Some people dropped their holding happily.
Interestingly, our man showed no signs of panic. !
In another 2 weeks it went to 23 and maintained that level for about 10 days. Again, no action from our man.!
Withing the period of 3 months of XR, it went to 20, 25, 28, 30, 35, and finally DOCK was docked around @ 40/-
Our hero sold his 42,000 @ 40/-
Brokers, fellow traders asked/expected him to re invest in other shares.
He never fell into that trap to lose his money by re investing in already appreciated 'other stocks'.
Later we came to know that he bought a beachfront with 17 rooms and large spare area in down south somewhere closer to Hambantota- Kataragama roadway using his money.
He renamed it as 'Docks.'!