After Securities and Exchange Board of India (SEBI) interim order on Brightcom Group raising concern over the company’s preferential issue, Shankar Sharma and 21 other shareholders of the digital marketing company have been prohibited from offloading their stake in the company. Though, the company has been continuously informing bourses about the developments post-SEBI order, ace investor Shankar Sharma has come forward ahead of the board meeting scheduled on 27th August 2023 and talked about the investment wisdom while indulging in 4 AM investment.

In a long tweet, Shankar Sharma said that he has already done and compiled regulators data requirements, submitting all investment remittances to the company. Explaining pros and cons in 4 AM investing, market magnate said that problems are known and priced in, while the upsides aren’t. He said that known problems can be modeled whereas unknown problems are problems are impossible to protect against. See Shankar Sharma tweet below

Explaining the investment wisdom while investing in stocks, Shankar Sharma tweeted, “When it comes to 4 AM plays, of which I have done many, making a lot and losing a fair bit too. And more specifically, my investment rationale for , so that it serves as a good ( horror) case study in 4 AM investing. I have known Suresh Reddy since around 2014-15. He would occasionally meet & explain his business prospects to me. I never got interested primarily because a) it had a lot of debt, b)I saw the balance sheet as being bloated.” “Then came COVID. The pandemic was a boon for all Ad Tech companies worldwide as digital spending surged. BCG’s numbers were surging too , as were for other similar companies in India and US ( Trade Desk, eg). That’s when, on or around September 2021, that I decided the opportunity looked ripe: balance sheet had been restructured, impairment charge had been taken, ROE was improving, debt was gone, and business was growing sharply. I spoke to overseas executives, noted that EY was auditing a large part of their overseas profit,” Sharma added. Risk involved in 4 AM investmentAce investor went on to add that people would murmur BCG has governance issues, “I was sure there were, else market wouldn’t be trading it at book value for a debt free company, 15% ROE. However, that’s exactly the essence of 4 AM investing . Such stocks are cheap because of historical baggage. The bet in 4 AM investing is that problems are known and priced in, while the upsides aren’t . The operative term here is “known problems”. We can model for known problems. Unknown/undisclosed problems are impossible to protect against.” On latest SEBI’s interim order, Shankar Sharma said, “The latest interim order lays bare things that would shame a porn star. It also shows the utter lunacy in some Mgt decisions. I mean: if an employee has to buy shares in your company, you can give a loan/arrange an NBFC loan, like many companies do. Why go through crooked hoops to facilitate the purchase? There are many other examples one can see, of sheer stupidity, apart from maniacal malfeasance, at play. The feeling one gets as an Investor, upon reading the interim order is of eating a sandwich of one part shock, one part horror, with the middle layer of sheer anger.”