October Issue of Ultimate Value Finder is Released

The October issue of Ultimate Value Finder is now out. I covered three investment opportunities:

Investment Opportunity 1

I love watching panic selling and it is not because I like to see people jumping out of windows but because fear makes investors lose their ability to reason, which in turn creates prices that make a reasonable person say – are you kidding me?

If you want to see a perfect example of this, just look at Investment Opportunity 1. In February 2012, the company’s stock was on its way to $30 per share, and on July 24, it sunk to as low as $8.11 per share. Did the seller have any common sense left considering that the company had approximately $8.25 per share in cash and investments, no debt, and is generating almost $3.00 per share in earnings? Apparently, all their reasoning went out the window. Since then, the stock price rebounded to $10 per share but when you take out the cash and investments, it is still trading for something close to one times earnings.

Investment Opportunity 2

Investment Opportunity 2 is a company with several different businesses. At the end of 2007, the company’s stock price was $30 per share. Then, the price collapsed at the end of 2008 along with all the stock that took a dive during the 2008-2009 financial crisis. It reached its low of $3 per share in November 2008, but then quickly recovered to almost $15 per share. Because of temporary problems within one of its business segments that began at the end of 2010, the stock price has been in a continual downtrend. In April 2012, the stock price bottomed at $3.50 per share, quickly rebounding to its most recent price of $5.40 per share.

When the stock price reached these extreme low levels, two insiders took the opportunity to enrich themselves at the expense of short-term-oriented investors. One of them invested $192k in the company’s stock. Today, the company is value at a level of what one of the company’s business segments could be worth in several years.

Investment Opportunity 3

Anytime you see a stock price down 75 percent in a matter of weeks while the insiders are buying and the long-term fundamentals of a business are phenomenal, it is time to get greedy. In March 2012, the company’s stock was trading for more than $4 per share and in September 2012, it collapsed to almost $1 per share. Now, it is trading at $1.65 per share.

Did something terrible happen? Not really. Is the company about to go bankrupt? No, it has lots of money in the bank and is also making lots of money. Did the long-term fundamentals change? No, they are actually getting better every day. So what happened? Fear happened, and you know very well what happens to people’s ability to think when fear overwhelms them.

If you an Ultimate Value Finder subscriber, then you already received a separate e-mail with the full October issue. If you didn’t subscribe yet, but wish to do so, click here.