The Next Deep Value Corner of The Market

In my last article I shared the strategies of three famous value investors. Each investor had one shared theme: focus on downside protection.

These investors knew that in order to generate outsized returns, they needed to not lose money. Not losing money keeps them around long enough to reap the benefits of deep value investing.

Venturing Where Others Won’t

It’s also important to know where these investing legends found their ideas. How did they screen for stocks? Which rocks did they overturn? What was their sourcing process?

Let’s take a look at each investor.

Seth Klarman

Klarman searches through the market’s junk drawer. He focuses on companies on the verge of bankruptcy and stocks trading below cash or assets. These aren’t crowded investment spaces. You won’t find these companies on CNBC, Bloomberg or FinTwit.

Where to Find Klarman-like ideas: SEC Filings, Google Alerts, All-Time Lows

The tool I use to find companies on the verge of bankruptcy is to set Google Alerts. I’ll set alerts for the keywords:“Reorganization of bankruptcy” or “Chapter 11 stocks”. You can also scroll through filings of companies trading around their all-time lows.

You gotta put in the work. But then again, this is valuable work as other investors aren’t looking in these spaces.

Joel Greenblatt

Greenblatt loved spin-offs and dedicated most of his book You Can Be a Stock Market Genius to the topic. We’ve covered spin-offs in previous emails, but let’s recap.

The reason spin-offs are attractive is because of forced selling. Institutions can’t hold certain spin-offs. This forces them to sell the shares for non-fundamental reasons.

Where to Find Spin-offs: Google Alerts, SEC Filings, Spin-off websites

My favorite tool to find new spin-off ideas is a simple Google Alert for the keywords “stock spin-off” or “spin off”. You’ll sift through a few TV show spin-off rumors, but it’s worth the time. I also search for SEC filing Form 10-12/B. Companies must file this form when spinning off a company.

For more information on spin-offs, check out the website Stock Spinoff Investing.

Michael Burry

Burry preferred ‘ick’ stocks. These are stocks most investors pass over without a second glance. Along with these, Burry looks for ‘rare birds’. Rare birds are liquidation situations, stocks below net cash, etc. Things you’d find Klarman looking at.Where to find ick stocks: 52-week low list, all-time low list

Where’s The Next Deep Value Corner?

These investors go where others won’t to generate differentiated returns. In this month’s Value Ventures we’re diving deep into one of those areas.

This area remains untouched by a majority of the investment community.

Yet we believe this area is on the cusp of a major bull run and we’re revealing our top two picks.

A Potential 5-Bagger

Whenever you hear “potential five-bagger”, you roll your eyes and assume it’s another high-flying, cannabis stock. Yet one of the companies we found has the potential to be a five-bagger without much growth. In fact, if the company stays exactly where it is, we still see 300% upside.

This potential five-bagger meets all our requirements for an off-the-beaten-path idea. Management owns over 90% of the business. It’s the leader in its industry. It’s growing revenues, EBITDA and paying down debt. It trades less than $3,000 per-day. And market cap is around $350M.

It’s one of the cheapest businesses I’ve found in 2019.

You can read all about it in this month’s Value Ventures report. All you have to do is sign up at the link below:

Click here to discover the market’s next 5-bagger!

If you have any interest in catching this stock’s run make sure you subscribe now, because sooner or later the herd’s going to jump in and send this stock soaring.

Click here to subscribe to Value Ventures!

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Brandon Beylo

Value Investor

Brandon has been a professional investor focusing on value for over 13 years, spending his time in small to micro-cap companies, spin-offs, SPACs, and deep value liquidation situations. Over time, he’s developed a deeper understanding for what deep-value investing actually means, and refined his philosophy to include any business trading at a wild discount to what he thinks its worth in 3-5 years.

Brandon has a tenacious passion for investing, broad-based learning, and business. He previously worked for several leading investment firms before joining the team at Macro Ops. He lives by the famous Munger mantra of trying to get a little smarter each day.


Investing & Personal Finance

AK is the founder of Macro Ops and the host of Fallible.

He started out in corporate economics for a Fortune 50 company before moving to a long/short equity investment firm.

With Macro Ops focused primarily on institutional clients, AK moved to servicing new investors just starting their journey. He takes the professional research and education produced at Macro Ops and breaks it down for beginners. The goal is to help clients find the best solution for their investing needs through effective education.

Tyler Kling

Volatility & Options Trader

Former trade desk manager at $100+ million family office where he oversaw multiple traders and helped develop cutting edge quantitative strategies in the derivatives market.

He worked as a consultant to the family office’s in-house fund of funds in the areas of portfolio manager evaluation and capital allocation.

Certified in Quantitative Finance from the Fitch Learning Center in London, England where he studied under famous quants such as Paul Wilmott.

Alex Barrow

Macro Trader

Founder and head macro trader at Macro Ops. Alex joined the US Marine Corps on his 18th birthday just one month after the 9/11 terrorist attacks. He subsequently spent a decade in the military. Serving in various capacities from scout sniper to interrogator and counterintelligence specialist. Following his military service, he worked as a contract intelligence professional for a number of US agencies (from the DIA to FBI) with a focus on counterintelligence and terrorist financing. He also spent time consulting for a tech company that specialized in building analytic software for finance and intelligence analysis.

After leaving the field of intelligence he went to work at a global macro hedge fund. He’s been professionally involved in markets since 2005, has consulted with a number of the leading names in the hedge fund space, and now manages his own family office while running Macro Ops. He’s published over 300 white papers on complex financial and macroeconomic topics, writes regularly about investment/market trends, and frequently speaks at conferences on trading and investing.

Macro Ops is a market research firm geared toward professional and experienced retail traders and investors. Macro Ops’ research has been featured in Forbes, Marketwatch, Business Insider, and Real Vision as well as a number of other leading publications.

You can find out more about Alex on his LinkedIn account here and also find him on Twitter where he frequently shares his market research.