TK’s firm sells: A case of cashing-in on bull run or severing links in disgust?

• Former SEC Chief Tilak Karunaratne-linked Multiform Chemicals sells Rs. 10 m worth shares of Central Finance, NTB last week fetching Rs. 2.2m more than the value at which stocks were trading when he quit nearly a month ago

The former Chairman of the Securities and Exchange Commission (SEC) Tilak Karunaratne could be still very vocal about market’s ills and term the unprecedented rebound since he left as a fake, or worse, manipulated, but his firm Multiform Chemicals Ltd. appears to have nevertheless cashed in thanks to the bull run.

His company divested some shares from its investment portfolio last week and the sale could also be even a case of exiting from or not wanting to be part of a highly manipulative market under a new regime as per his convictions.

Different descriptions apart, on Wednesday, Multiform Chemicals sold Rs. 5.4 million worth of Nations Trust Bank (NTB) shares (around 89,500 shares) and Rs. 4.6 million worth of Central Finance shares (around 27,850 shares).NTB shares were sold at around Rs. 60 each and Central Finance stock done at Rs. 165 each.

Interestingly, the sale comes when the market was on an unprecedented upturn. The sale of shares fetched Rs. 2.2 million extra if one compares the prices between the exit day and the time he left the SEC. However had the sale been made on Friday, the shares could have fetched more as they closed higher.

On the last day (17 August) of Karunaratne as the SEC Chief, Central Finance closed at Rs. 129.20 and by Wednesday, it had risen by Rs. 35.90 or 28%. NTB’s closing on Wednesday reflected an increase of Rs. 12.50 or 26% in comparison to its level on 17 August.

The timing of the sale could mean cashing in when the market is on the up, though the actual profit Multiform Chemicals may have made from the sale depends on at which price CF and NTB shares were originally bought.

The day he left SEC, the market was down by 19% year-to-date, whereas by Wednesday the dip was only 6.7% and by end last week it was down to a mere 2.4%.

The sale date Wednesday was the day after the market dipped. Perhaps given his own assertion that the bull run isn’t real the Tuesday’s dip may have signalled most that the rally was over. However that wasn’t the case as CSE between Wednesday and Friday soared dramatically with blue chips on higher demand as institutional and foreign investors followed bullish retailers. From 8% year to date dip on Tuesday, ASI jumped to finish the week to become 2.43% down year to date by Friday.

Central Finance closed on Wednesday up by Rs. 2.60 to Rs. 165.10 whilst it hit an intra-day high of Rs. 166. It ended the week at Rs. 172.70, up by Rs. 7.70 with 0.33 million shares traded. Central Finance saw a volume of 97,468 shares changing hands on Wednesday with Multiform providing 28% of the liquidity.

On the other hand NTB rose by Rs. 1.60 to Rs. 61.10 on Wednesday after hitting a high of Rs. 62 with 390,270 shares, with Multiform accounting for 23% of the liquidity.  NTB finished the week at Rs. 62.80, up by Rs. 4 with two million shares traded.