Hardly Halcyon

The Tuamotu Kingfisher (TK) is one the world’s most endangered birds. So is Kingfisher Airlines (KFA). The entire population of the TK has dwindled down to less than 125 (on one lone, tiny island is the South Pacific). The stock price of KFA has dwindled down to less than 20! A lot of myths and stories abound on the mirthsome kingfisher.

I can recount some of them (NB: the distinction between Kingfisher and kingfisher is intentional)

• How the kingfisher got its bill: Actually, in today’s day and age of “good times”, the whole point is not about the Kingfisher getting any bills, its about refusal to pay bills! Whether it be tax bills; PF bills; ATF bills; Interest on loans bills etc etc. But yes, at approximately the time of creation, there was a council of wise animals who deliberated over the raw deal that the kingfisher had got. These wise animals were the Stately Bird of India (SBI); the Bird of India (BOI); Bird of Birds (BOB); Punjab’s Naive Bird (PNB);  I See that I See Insolvency (ICICI) etc. These wise animals expressed that while the kingfisher was supposed to be a sea bird, it was neither given webbed feet (more FDI!) nor a good bill (in the form of govt protectionism!) making it extermely difficult for him to earn a decent living. So, the council of wise animals, in all their wisdom, decided to be owls and attach an awl at the tip of kingfisher’s beak (generous credit lines!). The council of wise animals was really very wise – they kept increasing Kingfisher’s bill so that it could fish more. For fish were hard to come by during these “good times”. Some of them were in fact becoming more like Kingfishers themselves (by taking on equity) and some of them were lengthening  their beneficiary’s beak further using its good name (lending against a franchisee brand value as collateral!!!)
• The daughters of UB Holdings: The Alkyonides were the seven nymph daughters of Alkyoneus, king of giants. Just like Kingfisher Airlines, UB Engg, United Spirits, Mangalore Chemicals and McDowell Holdings are some of the daughters of UB Holdings, King of Good Times. When their father was slain by Hercules, the daughters flung themselves into the sea. Amphitrite, sea-goddess and wife of Poseidon, transformed them into ice birds, or kingfishers. The Alkyonides signified prosperity, joy, liberation and tranquility. The daughters of UB Holdings  however seem to represent lack of these today!
• Hardly Halcyon any more: The “good times” between the mortal king Ceyx and his wife, the  goddess Halcyon were numbered on the (Kingfisher) calendar as they had caught the envy of the higher Gods. The Greek Gods, peeping toms that they were, overheard some private jokes being passed between Halcyon and Ceyx where they were comparing themselves to Hera and Zeus respectively. The Pantheon’s pride wounded, a chain of events followed which ultimately resulted in Halcyon and Ceyx transformed into kingfishers. Such generosity from the Gods had conditions - Halcyon could lay eggs only in winter and by the sea, always coming to grief as the wind and tide kept washing them away. So Halcyon’s father, Aeolus (a lesser God. Of winds) intereved and procured a period of quiet and calm approximately 2 weeks around winter solstice when the winds would die down and the kingfisher could roost. Winter solstice is usually on 22/23 December. The Halcyon days are usually observed from 14/15 Decemeber. Will something happen and save Kingfisher yet again?

This is all myth anyways. Just like some tricks and inconsistencies that the auditors pointed out during their statutory review of Kingfisher’s accounts. The moment when the banks were asked to convert their loan exposure into equity exposure, one should have dived underwater on this stock. Personally to me, it all seems odd and nostalgic since UB Holdings has been my best multibagger investment to date. I had bought this on 29Dec2004 @ 100.25 per share and jumped out at 719.71 a share. Considering a generous lottery of 1:1 bonus granted in Jul’06, this meant a 14 bagger for me. The investment logic was simple – A) world’s second largest retailer of daaru was selling at a few hundred crores and B) every evening when I used to travel back home from work (Fort area in Mumbai to Kandivali) all the liquor shops I’d see on the way were thronging with customers. Buying the share was easy/a stroke of luck - keeping the investment and letting it run its full potential was the hard part. Honestly, I did not do any big analysis before deserting the slender tree branch on which Kingfisher sat. I just felt that a 14 bagger was good enough for me. But yes, in hindsight, one can see warning signs begin to emerge the moment a company departs from its core competence (making and selling liquor to a rapidly urbanising economy growing at 5% – 7%) to more colourful adventures (airlines).

Well, there may yet be some nice fat and juicy worms which the Kingfisher may just grab at using his much discussed beak and whatever people are writing about it may not be its obituary, but as far as I am concerned this stock is too risky to own as of now.