Bombay Oxygen: What's In A Name?

21 Apr 2021  Read 1711 Views

Investors are going gaga over Bombay Oxygen, a non-bank lending company, just because its name contains the word ‘oxygen’! Like seriously? And this really got us thinking…

“What's in a name? That which we call a rose by any other name would smell as sweet.” - William Shakespeare (Romeo and Juliet)

So, what’s your name? Does it matter anyway? What if you’re renamed? Will it alter your personality? Hmm? Apparently, it does not matter at all. Not until you enter the stock markets!

Here’s the premise. Unbeknownst to us all, the second wave of the virus was rolling out too close to us. And before we could know, it had made the headlines: This time it’s hitting hard! Hospital beds were running out, people badly needed oxygen-support! Meaning, the supply of oxygen was falling short of its demand. No wonder why the prices of oxygen cylinders have more than doubled in some parts of the country! And whoever was in that business, now came to the frontline.

It’s a no-brainer why companies engaged in the manufacturing and supply of oxygen witnessed a surge in the prices of their shares. Linde India ltd, Natural Oxygen and Bhagwati Oxygen, for instance, saw their prices surge by over 50% in the past few months.

And while you could attribute some logic to the boom in share prices of gas companies, what you’re gonna read now will make no logical sense in any world!

Bombay Oxygen Investment Limited, a non-bank lender, became an offshoot lucky beneficiary of this boom, as its share price upped over 130% this month, though it is NOT engaged in the production or supply of oxygen! Why, you ask? Well, just because its name contained the trigger word: “oxygen”!

Damn! We have to talk about this stupidity brewing within the stock markets…

Bombay Oxygen doesn’t sell oxygen, mind you!

Since its inception in 1960, it used to be an industrial gas manufacturing company. Those days, it was named: Bombay Oxygen Corporation Limited. It carried out the production of oxygen and other industrial gases for over half-a-century. But then, fate had something else in store for the company.

In 2019, the company scrapped its oxygen-manufacturing business and transmogrified into a non-banker lending company! A weird shift, indeed. And now it has reshaped itself into Bombay Oxygen Investment Limited.

Needless to say, it owns substantial financial investments like shares,mutual funds, etc and that is the main source of revenue for the company. It is basically a Non-banking Financial Company (NBFC).

Long story short, now it has no relation to ‘oxygen’ in any of its business activity, even though its name suggests otherwise! The name is just to retain that brand loyalty, isn’t it? Although the company somewhere on its website mentions that it still produces oxygen, it most probably doesn’t. Even the BSE considers the company to be an NBFC. So, no connection with ‘oxygen’, whatsoever.

And what happened recently in the markets will seriously blow your minds!

Investors interpreted its name too literally and mistook it as an oxygen-manufacturing company, and started aggressively buying its shares!

Consequently, its shares, which were trading at around Rs 11,000 levels on March 31, by April 20 had already touched their 52-week high of Rs 25,500. That’s a massive 130% rise in just twelve sessions! A classic case of ‘15-din-mei-paisa-double’ ;-)

Hitting the upper circuit in BSE, it remained frozen as there were only buyers of the stock!

What will leave you totally flabbergasted is that investors didn’t even bother about a clarification provided by Bombay Oxygen regarding the irrational exuberance, as even after that, the price upped more than 27%!

The BSE had sought this clarification from the company on the significant price movement of its shares on April 8, to which the company replied: “There is no pending information or announcement which may have a bearing on the price movement of the company. Therefore, the movement in the share price of the company is market-driven and the company is in no way connected with any such movement in price.”

That’s like the company saying: ‘These investors are fools and they’re being played by their own stupidity! We have nothing to do with that.’ And truly so!

Back during the financial and IT boom of the 90s, many companies befooled novice investors by adding 'finance and investments' to their names! So, the SEBI had mandated that to rename a company you must have atleast 50% of last year's revenue accounted for by the new (renamed) activity. It did go a long way in saving investors from the perches of such bogus-named companies.

However, in the current scene, when the investors are being wasted by their own foolishness, what can the SEBI, or any other regulator for that matter, do? Nothing, right?

By the way, if you feel this is just an Indian thing, look around the world, and you’ll find many more such acts of ultimate idiocy by investors…

Investors buy up the wrong Zoom!

With the workforce working from home and students doing classes online, video calling had become the new normal. And of course, it wasn’t a video call anymore, it was as people name it: “Zoom call”! Yes, Zoom, a video conferencing tool, had become so popular during the pandemic that it was almost synonymous with video calls! Anyway, there was another stupid hoarding-up prevailing then.

Zoom Video Communications, the company we know (the video chat platform) trades in the US stock markets under the ticker symbol of ‘ZM’. Whereas a chinese company (that manufactured parts for mobile devices) of the same name, called Zoom Technologies, traded under the ticker symbol ‘ZOOM’. Investors from around the world mistook this Chinese company as the company that provides video conferencing facilities and started buying the shares of that company!

You’ll be shell-shocked to know that the accidental purchase of the wrong Zoom shares skyrocketed the price of this lesser-known company by over 1800%! And the regulator had to step in and remove the company from the stock markets!

When twitterati perceived the wrong Signal!

His tweets are just another thing that Elon Musk is famous (and infamous) for! Last year, when WhatsApp was under scanner for its privacy policy and stuff, the ‘Technoking of Tesla’ tweeted: “Use Signal”. He meant to promote the use of Signal, an encrypted messaging platform, instead of WhatsApp. But it seems investors had parked their minds in their garage!

No sooner did Musk tweet about Signal messaging platform, stupid investors started buying up the shares of Signal Advance Inc, another technology company just with the the same name! It’ll take your breath away if we tell you that its shares surged over 11,700% since Musk’s tweet! What else to say beyond this?!

There have also been cases where investors mistook Nestor (with the ticker of ‘NEST’) for Nest, a company that Google acquired, and Nestor’s prices went flying! Also when Twitter announced its entry to the markets with the ticker TWTR, another penny stock with the ticker symbol TWTRQ witnessed its price rise by over 600% in a day! Just more such instances of investors fooling themselves!

The bottom line

We won’t say much. Just this, if being a part of this kind of an irrational ride makes you feel lucky then let us tell you these are just short-lived. Before you know, these shares will go bust and you’ll be there sitting like a fool! Even shares of Bombay Oxygen have started showing evidence of this realization. Once the events unravel, the shares could slump to the dump!

Your instinct might often prompt you to do things that you wouldn’t have done logically! Don’t jump into trade with this temperament. The herd is only gonna take you to your doomsday. So, think, think twice, think again rationally. And whatever may be the case -

Do not panic-buy. Period.

About the Author: Abhishek Sahoo | 39 Post(s)

Abhishek has a love for numbers and words alike. With a passion for finance and interest in writing, he’s blending both as a Finance Content Writer at Finology. He writes to simplify the toughest of the technical stuff for readers and tries to make the reading exercise interesting. He is a CA Final candidate and aims to pursue a management degree from a top-notch b-school.

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