sell every stock you own, page-17

nzmicro

Actually it's a misconception that just because a stock sells for say, 60c and it has a dollar worth of assets, it's automatically a bargain buy and the market is incorrectly pricing the stock.

I have searched exhaustively for one of these, and have yet to find a bargain. CFE - which has roughly 45c per share in cash, no liabilities, and is selling for 27.5c, is an example. Seems like a bargain when you consider the fact that the board has no intention of distributing the cash to the holders. In fact it has acquired a greenfields iron ore project and states explicitly its goal as developing it. And it will cost more than all the cash they have to build that iron ore mine.

There are a bunch of smaller LICs that sell at 40 or 50% discounts to their portfolio. MMA and WIL are examples. But their portfolios are crap - WIL is loaded with financials and microcaps, if we're headed in a recession microcaps are as good as worthless, and MMA seems intent on making acquisitions with its cashpile, apparently looking to buy funds management businesses.

There's a very good chance that when this recession is through and done, some of these "bargains" will be worth, and be selling at, less than 50% of its share price today.