Tobias Carlisle wrote a book called "Deep Value: Why Activist Investors and Other Contrarians Battle for Control of Losing Corporations".
To summarise the book it's all about the cyclical nature of business and industries more broadly and mean reversion.
What was really interesting is that portfolio's of the most hated, most ugly looking businesses generally outperform the so called glamour stocks which have everything going for them.
Why is this? Because of cyclicality. As a business earns high margins competitors typically swamp into the industry to get a slice of the pie which slowly erases those high margins. Exactly the opposite happens to businesses in shitty industries with very low margins....retail. Retail has had terribly low margins for a while, businesses have left the industry and for higher returns elsewhere, that leaves the few businesses that survive (MYR) to then slowly build higher margins and returns which sees the stock price outperform.
It would appear I'm not the only one who has read Tobias' book.
Go MYR.
MYR Price at posting:
59.5¢ Sentiment: Buy Disclosure: Held
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