Safir Anand Advises Caution With Small Cap Stocks: Take Lessons From Brightcom Episode

Amid small-cap companies plunging 30-40% over the past month, value investor Safir Anand has warned investors of being more “selective” with what they buy.

What Happened? The popular IP lawyer tweeted on Monday about ad-tech firm Brightcom Group Ltd. which has seen a catastrophic drop in share value over the past year.

Anand tweeted about the stock, noting that its value had dropped by 81% since he’d first flagged Brightcom for its weak fundamentals back in February 2022.

“I may revoke my negative view in single digit or near since hardly anything in India has gone to zero except Sintex,” tweeted Anand.

In a follow-up tweet, Anand warned investors stating that small-cap stocks have been on a spiral over the past month. “Be selective of what you buy. Remember what happened to Brightcom. Don't buy anything not credible or too much on telegram or groups,” cautioned the investor.

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According to data compiled by Bloomberg, Brightcom Group Ltd. became one of India's worst performers in 2022 after a 2,500% surge in 2021. The ad-tech firm's stock declined more than 70% in 2022, making it the worst performer on S&P BSE 500 Index.

The slump started after SEBI raised concerns that some of the company's disclosures and financial transactions have been "detrimental" to investors.

It is also worth noting that no analysts track the company's stock, despite the meteoric rise which pushed its valuation above $2.5 billion (₹20,547 crore) towards the end of 2021.

Price Action: Brightcom Group Ltd. shares plunged 6.55% to ₹19.83 at market close on Monday

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Posted In: Brightcom GroupSafir AnandSmall Cap companies