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Finding Value InvestmentsSM
Having an Edge - Tender Offer Investing
Sure everyone knows the saying about how hard it is to find a needle in a haystack, right? And as George Soros tells us referring to investors, ďAs long as they understanding something better that others, they have an edge.Ē So that edge or special knowledge is similar to the needle. Armed with that insight, an investor can find the sought after prize of the needle in the haystack.
Often when looking for investments, it is not only where you look but also the special knowledge to look for something different than what others are looking for. Most investors look for value investments or growth and conduct tons of valid and useful research to those ends. Donít get me wrong, those are good efforts. But, maybe just maybe as an investor you should consider a more basic and simpler strategy, that of just making money. Before you start scratching your head, please let me elaborate with some facts and more details to explain per an example.
Take a company called Outerwall (NASDAQ:OUTR). The name most likely does not ring a bell but you are already very familiar with their products. OUTR provides automated retail solutions offering convenient products and services that benefit consumers and drives incremental retail traffic for retailers. In other words, think Redbox, those coin counting machines and the machines that take your old cell phones.
For some time OUTR has been having some serious cash flow problems related to pouring good money in after bad money. We donít need to get in to the weeds on those details. This is just giving some background information. As a result, in the 2QT of 2016 the stock was selling for about $42.00 a share. Then in August a tender offer was made of $1.6B by a global management company in an attempt to take the current publicly traded company private. That in itself is not all that uncommon. However, what is uncommon was the tender price offered was basically for $52.00 per share, which was about a 23% premium for the shares.
Therefore, the moral of the story is, if you have an edge to know to look for tender offers, then you will be the investor with intelligence and reap the just rewards, just like finding the needle. As George Soros was pointing out to us.
Undervalued companies over history have proven to provide many opportunities to increase your capital. That is why value investing it is still around after 83 years. And when you you couple value investing with some other strategies they can give you an edge.
This is one of the many benefits of our service. We find specific investment opportunities using security analysis research to find undervalued opportunities for our subscribers in our PWC STOCK REPORTSSM membership service.
At Port Wren Capital, LLC, we specialize in picking specific undervalued U.S. stocks using fundamental analysis developed by Benjamin Graham using a five step process. We have beaten the S&P500, DJIA and NASDAQ benchmarks since we started 5 years ago on our own investments. Discover the difference for yourself. To learn more contact us today.
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