Just trying to dump my emotions...I got interested in UNITED SPIRITS in early March 2012 when it came crashing to Rs 500 a piece. I bought more and more as it ride up, and by end of May, I had about 105 of my portfolio invested in this stock for an average cost of ~Rs 600.
Then, a thought came to me - am I buying the stock of a company which is owned by an egoist, and possibly cruel leader, who would not deal well with employees of his airlines, yet take away the profits from his liquor business...is he ethical...am I ethical in investing in UB group companies...
And then, I sold all UB group stocks I had at a loss! And decided never to invest in a company whose management is not ethical.
Come Diageo deal, and in retrospection, I tend to think of the following:
- I bought USL in the hope that a mjor stake sale will have to occur to keep the group afloat
- I forgot that, when stake is sold, it'll no longer remain a 'King of good times' company!!! How could I miss this simple point.
Then, if it had occured to me, I could have even analyzed the company as a turnaround - the management will change, and it'll become part of the world leader in liquor industry, was that not a great deal then to hold a part of global, successful business at such throw away prices?
If this had occured to me, I'd have analyzed Diageo and its business and management, etc etc, but would have held on to USL stock.
Yes, I'm losing almost 15% on my portfolio! The stock is close to 2.5 times my average purchase price, not to mention the further potential loss in years to come if Diageo can make it an even better business, and when Mr. Mallya loses almost all controlling stake in the company.
Anyways, I'll take this as a learning and analyze the big picture next time when I think of staying away from a stock because of ethical reasons. Also, a great practical example to delve into the world of turnarounds :-)
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