We run Special Situation Strategy on both Smallcase (initiated on 7th May, 2022) and our website (1st August, 2022). We are often asked the difference or similarity in both these services.

(Smallcase provides an option of executing the strategy in one go with your broker. Though you can pick and choose stocks to execute via Smallcase as well, there is no direct execution option from our website. Clients have to decided and execute (or not) stocks on the own.

Due to technical limitations of Smallcase, executing certain event based special situations like demerger, amalgamation of companies is difficult. Due to this, it is likely that the stock is not held for the full duration of the event on Smallcase. In website, we don’t have any such limitations.

Let us understand this with the help of few examples:

(a) In May-2022, Meghmani Organics (MEGH) was amalgamated into two companies – MEGH and MFL. Both companies were relisted in Aug-2022 after the due regulatory process was completed. MFL after listing gave only a brief opportunity to buy and hit continuous upper circuits. In Smallcase, we had to do a “technical rebalance” to exit MEGH in May-2022 and then add MEGH & MFL in Aug-22. Even though clients holding on ex-date will have no action to implement, these are added complexities while executing on Smallcase. If we don’t exit MEGH, the allocation will show drawdown of 100% (taking cost price as zero) and hence NAVs will be impacted.

(b) In Aug-2019, Excel crop Care limited (listed) was merged into Summito chemicals (unlisted) and the latter was relisted in Jan-2020. As per last traded prices and swap ratio calculations, Summito chemicals opened with a gap up of 50% profit. In smallcase, this is not possible to capture as there will be no holding in between the 4 month of regulatory approvals. In website, there is no such issue. The stock holding will remain in your demat and any gap-up will be beneficiary in the returns.