Tuesday, August 12, 2014

Up At Dawn

Break Of Day

I do like to get up early, even on vacation.  This is an early rising place, we are just off a commercial fishing pier.  These fishermen get up very early.  I suspect it is not so they can check on what has happened in Asia.

I Hate It When That Happens!

Besides my portfolios, I do flag stocks that I am considering from time to time on this blog.  One that I mentioned, and put on my watchlist a month or so ago was VRTV. What interested me about this company was it was a spin-off from IP.  As I have commented many, many times here - stocks that are spun-off are often incredible deals for investors. Greenblatt wrote at length about this in "You Want To Be A Stock Market Genius".  There are numerous studies backing up his assertion - when a company is spun-off, institutional investors often have to sell it as it may not meet their requirements (dividends, market cap etc).  Then you all of a sudden have laser focus of a management team and they can often find ways to add value.

When I flagged VRTV it was at $36.40.  It promptly dropped under $34 as institutions sold it. Also, seeking alpha wrote a very negative article to add fuel to the fire (International Paper's Spin-Off And Its Subsequent Merger Creates Veritiv, A Prime Short Candidate).

Guess what? Investing legend Seth Klarman the other day announced a sizable stake (Seth Klarman Buys 14% of Newly Formed Company Veritiv).  The stock popped 16% on the news and is now up 23% from when I flagged it and over 30% since negative SA article on July 2nd.

1 comment:

John Carney said...

Marsh,

Up at dawn, made me think of Jesse Livermore:
Jesse Livermore was one of the greatest traders who ever lived. You can read more about him here. Here are his trading rules written in 1940. You will find that many of them still apply today, proving that very little changes in the market over time.

1. Nothing new ever occurs in the business of speculating or investing in securities and commodities.

2. Money cannot consistently be made trading every day or every week during the year.

3. Don’t trust your own opinion and back your judgment until the action of the market itself confirms your opinion.

4. Markets are never wrong – opinions often are.

5. The real money made in speculating has been in commitments showing in profit right from the start.

6. As long as a stock is acting right, and the market is right, do not be in a hurry to take profits.

7. One should never permit speculative ventures to run into investments.

8. The money lost by speculation alone is small compared with the gigantic sums lost by so-called investors who have let their investments ride.

9. Never buy a stock because it has had a big decline from its previous high.

10. Never sell a stock because it seems high-priced.

11. I become a buyer as soon as a stock makes a new high on its movement after having had a normal reaction.

12. Never average losses.

13. The human side of every person is the greatest enemy of the average investor or speculator.

14. Wishful thinking must be banished.

15. Big movements take time to develop.

16. It is not good to be too curious about all the reasons behind price movements.

17. It is much easier to watch a few than many.

18. If you cannot make money out of the leading active issues, you are not going to make money out of the stock market as a whole.

19. The leaders of today may not be the leaders of two years from now.

20. Do not become completely bearish or bullish on the whole market because one stock in some particular group has plainly reversed its course from the general trend.

21. Few people ever make money on tips. Beware of inside information. If there was easy money lying around, no one would be forcing it into your pocket.

I am sure you have seen this but when I think of VRTV,AAPL,AGX, NUS,COH,RGR and HFL I am reminded of rulle 3,4,5,9,10 and 11.

Good luck on the August picks!