You find a falling knife and catch the bottom when the selling is far below its fundamental. The problem with this is you have to act fast in terms of research, people who are selling by default know a lot more about the company than somebody who stumbled across it after noticing the SP movement. FIG was steady around 40c for months until it collapsed to 20c when they announced the RC, I crunched the numbers and upside significantly weighs downside, only to watch it fall to 10c. The second problem is the company might not bounce for years, even if you are correct, it may stuck there as a value trap.
I once bought tiny company with no debt that fell into negative EV, which means if you bought the entire company you get paid for buying it, its even more bargain than FIG, management sat on a bank balance bigger than market cap and didn't pay a dividend, SP went nowhere and I exited out of frustration (few years later Mercantile came and bought them out at 5 times the share price).
FIG Price at posting:
9.1¢ Sentiment: Hold Disclosure: Held
