Ten Baggers, or Three Baggers I Don't Care

[ericd1]

Could this be the time to buy $xxx of every NYSE issue trading under $1.00 a share and holding for three years?

 

Actually there are some potential ten baggers out there...I'll even settle for some three bagger ideas...(for a small % of the portfolio)

 

To kick this off I'll mention some I'm looking at...

 

Ferro Corp FOE (Chemicals) Debt issues, but they make interesting materials including thin file for solar. (I'm long)

 

ACCO Brands ABD (wholesale office products) Re-organization in process, debt issues

 

National Financial Partners NFP (invest services) Disappearing business?

 

Others?

 

 

[watsa_is_a_randian_hero]

Bank of America Preferreds selling at 20% of face.  That is a 5 bagger

[scorpioncapital]

John Templeton did this and got rich. He bought all the shares under $1 during a deep recession/depression and waited a few years.

[Crip1]

In the past 4 trading days AIG has been a 3+ bagger. Not too sure about Citi, but I think that they doubled over the past week or so.

 

There is an attraction to these former heavyweights selling at such low levels, but I really cannot value ANY of these companies so to determine whether US$0.95 is or is not a bargain. They very well may work out, but from my perspective, unless you can value the IV, then it is little more than a crap shoot.

 

-Crip

[Guest JackRiver]

ericd1

 

The one issue I would have is that the 1 dollar figure is somewhat arbitrary.  Why not anything selling under 2 dollars? 

 

It's really a function of number of shares issued and outstanding and not the price per share.  Viewed from that perspective you are back to investing based upon the discount to intrinsic value. 

 

I will say this, if you could make the case that there is some institutional or market wide glitch that causes market participants to sell for a reason outside of fundamentals of the business then I would say have at it.  e.g. certain institutional investors not being able to invest in penny stocks, stocks under 5 dollars per share.  I believe we saw some of these opportunities recently in a few financial stocks and as I understand it, some of these triggers were set off from share prices at or below 10 dollars per share.

 

Personally, I don't believe there is a large enough swath of companies that are trading at low prices per share unjustifiably to make it pay off as much as one might think.  In past corrections I think you would have found the opposite, but only time will tell.  I know some here will disagree with me, but I don't see a whole lot of 50 cent dollars or 25 cent dollars.  I however do believe there are a reasonable amount of companies to buy at good prices given the risk.  As others have suggested, there are interesting moves to be made in the credit markets if one is so inclined.  This would be the credit market version of the point of your post. 

 

Yours

 

Jack River