back. The first and foremost reason is that there is a resurgence in real estate cycle. So this is a statement that was given in the management report. And I completely agree with this that real estate works as a cycle, that there will be a downtrend for six, seven years, then there will be an uptrend for 6-7 years and the cycle repeats. And this is true for almost any commodity cycle. This also applies somewhat to real estate.
Now, last 7-8 years have been really bad for real estate sector in India. There has been a bunch of regulatory and debt ridden challenges within the real estate industry, and there has been a massive downturn, no doubt about that. So real estate has taken significant beating. Now, hopefully,
with the industry and demand coming up and the real estate sector bouncing back, I feel that real estate is nicely poised to make a comeback. Now comes the second thing that the management clean up has already started. For example, you will see that promoters offload 11.76% stake in India Bull’s Housing Finance. And this news is from December 16. Now, I’m not a very new oriented person, but this is a very important piece of news. So I’m highlighting. So you’ll see that Sameer gehlod has sold eleven point 76% equity. And now you’ll get scared that 11.6% equity sold promoters are this that no,
you have to understand the reason why, because there was a lot of pressure in terms of doing a clean up of the management. This is a privately held organization. And in order to raise money, equity selling happens no problem there. Second, in order for professional management to come in and do cleanup, sometimes promoters have to sell their equity. It’s not sold out of Mal intent. It is simply sold out because of the fact that you need to give other people equity so that they can come in and help you manage the company. So that is the intent with which this equity is given. That is my understanding.
Now take a look at that. Okay. sameer gehlod sold this equity and who bought it? That’s the most important part. So this equity has been bought by Morgan Stanley and Abu Dhabi Investment Authority, which has taken significant positions in India Bull’s Housing Finance. Now, Interestingly, Morgan Stanley before buying a stake in India Bull’s Housing Finance. They actually downgraded the rating for Indiabulls Housing Finance. So, yes, promoters have been forced to cut their holdings, but this holding has been purchased by good people right now. Also, let us quickly scan through the promoter holding also.
So this data is still September 2021. No change in promoter holding. Now, the promoter holding has been cut and it will go to Fi’s Di’s here. So the holding is still in strong hands. It’s not as if that holding has been given to some random people. Now comes the most important reason, in my opinion, as to why the stock is likely to bounce back. If you actually check, how are they behaving and what signals the company is giving? You can check that from their cash flow statements, right? So you will see that operating activity has turned positive. This is not a problem. Take a look at financing activity. So you’ll see negative. Yes, this is negative. But what is the money being spent on now? This is being spent in terms of reducing the debt. Now, this is absolutely not bad.
This is a good sign. If the company is repaying its debt aggressively, it is a good sign. So the intent with which the company is operating now that they’re trying to bring professional management, they are trying to reduce the debt. These are all good signs for the company. And addendum here is that whatever wrong could have gone with the company. In my opinion, it has already gone wrong with the company. Of course, the stock price can fall. I’m not saying no to that. But a lot of beating has already happened for this stock. And there seems to be no legitimate reason as to why this stock will be further beaten down. That is my understanding. And of course, yes, the stock can still go down by 15%, by 80%. Who knows? And that is precisely the reason why there is a method.
And therefore, what I’m doing in terms of purchasing this stock is fairly simple that I’ve started to take small positions in this stock. So I’m trying to do an sip into his stock. So what I’ve done is that I’ve invested the first 10% of the money that I want to invest in this stock. Now.