Multibaggers for future

After astronomical valuations of Facebook , here comes LinkedIn . The professional networking site has received US$53m investment in fourth round of funding. The transaction involving investment from Bain Capital, Sequoia Capital, Bessemer Venture Partners and Greylock Partners values the company at US$1bn . Microsoft invested US$240m late last year in Facebook for a 1.6% stake valuating the social network at US$15bn . The high price tag attached with these deals puts all traditional valuation matrices like net profit, book value, PE ratio etc at back burner. While many analysts claimed that the deal reflected Microsoft's urge to grow its advertising business more than Facebook’s true worth, LinkedIn deal appears more balanced though still on the higher side. LinkedIn has 23 million members whereas Facebook had 50 million members at the time of the deal. Some simple back of the envelope calculations show that deal valued Facebook at a PE multiple of more than 300 and sales multip

Ahhhh…. sounds like consolation, but it’s not just retailers losing money in the market. Even the valuation experts were taken by storm in the recent bull market. Apart from the usual investment in unlisted companies with 2-3 years timeline, Private Equity (PE) players invest in some listed companies as well. These kinds of deals are known as private investment in public enterprises ( PIPE ). It not a written law in some market bible that PE firms can’t invest in listed companies, but they usually refrain from doing so and for good. Last bull market saw many PE firms charting PIPE deals at exorbitantly high valuations only to see their money vanishing in a jiffy. A market study by Venture Intelligence shows at least 33 such deals are already out of money. The impact gets magnified with additional information that PE players striked 51 PIPE deals last year. The deal book has all big names including Carlyle's investment in Allsec Technologies, Reliance Capital's in Maxwell In

Financial year 2007-2008 has ended and Indian stock markets are off the radar of global investors. Most mutual funds gave excellent returns as long as the market was in top gear and there is a clutch of funds with superb numbers even after the January crash. However, retail investor is again trapped with no solution in sight. If the situation is prompting you to think that stock markets are a perfect destination for becoming millionaire by investing billions, please stop reading this. With all sincerity and after taking a heavy beating on my own portfolio, I still believe that stocks are perfect to make serious money without sharing the same risks of running a business. World’s richest person got all his greens from investing in stocks, after all. The description should ideally lead to the conclusion that rampant and wild directionless investment albeit large size is not going to get anywhere except at the bottom of the pile. Simultaneously, it calls for a change in investment strategy