As investors, we deceive ourselves a thousand different ways, both small and large. We attribute gains to acumen when they are the product of luck, and we attribute losses to ill fortune when they are often the product of stupidity or inattention. We believe that the market remembers or cares about the price we paid for a stock, or that out stocks will go up when every other stock is going down. But most commonly in markets, we fall in love with a company that is unworthy of our affection. –Leon Levy
Note: Worrying about macro issues or politics should not distract you as an investor. Our job is to protect and grow our capital.
Better to study quality companies like:BDX_VL and SWK_VL so you are prepared to pounce on the right price to meet your margin of safety.
Book on Corporate restructuring
Creating Value Through Corporate Restructuring – Stuart C. Gilson & Edward I. Altman A good book on special situations through the eyes of a CFO.
Supplement: Creating Value Through Corporate Restructuring Course-1
Corporate Restructuring Course syllabus
Special Situation are typically viewed (by me) as asset conversion activities. Management is incentivized to unlock undermanaged or mispriced asset values. The corporate event is what drives returns not necessarily the market in general. When quality companies are not on sale, I look here for opportunities.
American Corporations Worth More Dead than Alive 3 Parts by B Grahams
Special Situations and Tender Offers
Stock repurchase by tender offer
Tuck School Research on Tender Offers
Teledyne and a study of an excellent capital allocator_Tender Offers
What is right about rights_Gabelli
Rights Offering and Over-Subscriptions_Final
Special Situation Investing by Ben Graham
Workouts by Ben Graham from Intelligent Investor
To be proficient in special situation investing you have to look closely at management’s motivations and for uneconomic sellers. Practice and you will grind out decent returns (15% to 25%).
Learning hint: Take a particular technique of corporate restructuring like liquidation or tender offers and try to read as many case studies and articles about that subject as you can. Next develop search words that will help you find opportunities. A good place to view case studies is by looking through old blog posts at www.greenbackd.com.