Skip to content

Special Situation watch list

May 2, 2011

I have been scouring around for value ideas that I might translate into new portfolio positions, but lately without much success. I read the financial press, run a few value screens and peruse my favorite value investing blogs and forums with very little in terms of results. There just doesn’t seem to be that much out there that is dirt cheap. I keep looking, but alas, to no avail. The worst part is that my trading finger is beginning to get itchy even when the rational mind reminds me that I need to exercise extreme patience here. So far I’ve been keeping that itchy finger busy by placing limit sell orders in the hopes that Mr. Market has a really delusional day and wants one or more of my positions at whatever cost. But even that is getting old, and I need to direct my efforts elsewhere.

What to do? Well maybe its time to update that always important watch list just in case we have a sudden downturn in the market, or even, hooray, a flash crash!

All of you who read my blog know I’m a big fan of Joel Greenblatt’s classic “You can be a Stock Market Genius”, so it should come as no surprise that I like the kinds of situations that he focuses on in his book; spin-offs, corporate restructurings, merger securities, etc. So I’ll be starting the watch list with an eye towards special situations. Below are a select few that I think might merit a deeper look; hopefully I’ll be posting on each of these over the next several months and perhaps adding a few more.

Spinoffs:

  • Marathon Oil (MRO) to spin-off its refining operations: target date – 6/11
  • IDT to spin-off energy operations: target date – 8/11
  • Cablevision Systems (CVC) to spinoff AMC networks: target date – mid 2011
  • ITT to split up into 3 separate companies: target date – 2nd half of 2011
  • Marriott (MAR) to spin-off its timeshare business: target date – 2nd half of 2011
  • Sarah Lee (SLE) to slit into 2 separate companies and pay a special dividend: target date – early 2012

Merger Securities:

  • Genzyme contingent value rights (GCVRZ): issued to holders of Genzyme when it was purchased by Sanofi Aventis in April 2011

Contrarian value:

  • American International Group (AIG): I can’t help myself on this one. Everyone hates it; every portfolio manager who owned it in 2008 was burned on this holding during the financial meltdown so why would anyone be the first to buy it back and look like an idiot again? Only that super contrarian Bruce Berkowitz has ventured into AIG, and bigtime! But then again, he wasn’t burned on this company in 2008/2009. Furthermore there’s the issue of ownership: right now the federal government owns over 90% of the company’s equity. They would just love to be able to tell the public that the bailout funds have been repaid and are really chafing to get this done. So, pressure to sell and HUGE overhang! Could anything look worse?
Advertisements

From → Investment Ideas

3 Comments
  1. Good stuff, I actually looked at AIG on Friday, but their are just so many pieces it’s basically a black box, so they’re probably undervalued due to technical factors but it’s really hard to figure it out… it’d be interesting to approach them using options and basically just bet there’s some value left there, but the vol is high.

  2. rijk permalink

    gcvrz below 1 now with a max pay out of $13 and $1 for fda approval, i smell value!!!!

    how likely would if be that they don’t obtain fda approval?

    regards
    rijk

  3. Sergio8000 permalink

    For GCVRZ, GENZ refused to sell without the CVR. San thinks it should be 3-4$, GENZ thinks it is higher. Targets of phase 3 study are met. So basically, very low chances of no approval it seems.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: