PIA’s stock was worth less than PKR 5 a year ago and it rallied phenomenally to more than PKR 30 (in less than 6 months) as the government finally took concrete steps towards its privatization. Amid the different news flow, the stock then fell to PKR 12 before rallying back up to PKR 25.
However, last week, it all turned out to be a failure when only one bidder participated with a bid value of PKR 10 billion against privatization commission’s minimum value of PKR 85 billion. While it wasn’t a surprise considering what happened with IPPs’ PPA terminations; however, I won’t go into those details.
PIA’s market capitalization on Pakistan Stock Exchange at peak was close to more than PKR 160 billion. The government would probably have been better off selling its shares in the stock market 😀 Nonetheless, it’s not such an easy call, as PIA is the national flag carrier.
Now, since the bidding day, the stock is hitting lower circuits every day and has reached PKR 14 today. Despite the supernormal run, I never participated in this stock. A lot of my friends pitched this stock to me on the turnaround story, but I stayed away due to too much reliance on the bureaucracy which has a history of bad decision making.
Some might argue that I missed out on good potential returns but that involved more timing than anything. The best part about investing on fundamentals is that value is realized sooner or later. It’s much safer and simpler. Investing is more about discipline than anything else.
Remember Warren Buffet’s Rule # 1. Don’t lose money. Capital protection is your key as your returns compound over time into something big.