By: Jeff Pollock
September 16, 2017
The old saying to “buy when there’s blood on the street” is easier said than done. The quote itself can be credited to Baron Rothschild, a descendant of the Rothschild banking family, but the style is executed by very few investors.
When the price of a stock has declined and its chart resembles a ski slope, many cite the reason why the security has collapsed rather than where it will settle next after the headlines subside. Instead, with today’s 24 hour news cycle and quarter-to-quarter investment world, few look beyond the next 3 months to decide what stocks to own.
Over the years, countless examples have presented themselves as terrific buying opportunities to support our style of contrarian investing. This involves buying shares of a company deeply out of favour by the market and then holding onto it until the price returns to its true underlying value.
There are 11 official sectors to the market. Listed below is an example from each one over the past decade when a company experienced a one-time, non-recurring crisis that presented a buying opportunity for a long-term investor.
At Vestcap, we look for new ideas by analyzing companies that are temporarily out of favour.
Not all stock drops present a buying opportunity. Many have sold off for good reason. Instead, we look to see if the problems are temporary and solvable. Once we’re comfortable that this is the case, we’ll invest in the stock for our clients. After years of market growth, companies that miss quarterly expectations today are sharply correcting after an earnings miss. We’re running screens to find names that are high quality but have recently missed expectations following a less-than-stellar quarter. Following our decision to raise cash quite recently in client accounts, we plan to take advantage of opportunities as they present themselves in the months ahead.
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