Does anybody know of any good "distressed" stocks right now? I have a little that I invest longer term in some value and distressed plays, and I just sold out of FNMA for a triple today (it was a tiny trade though), now I am looking for something else. Just wondering if anybody had any ideas on stocks to check out?
Distressed Stocks
- Thread starter FCXoptions
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You are very right in that, I was also thinking about that. I was more looking for some to add to my radar for in the future. I am not planning on buying anything at the moment, I just had a very small amount of cash in my old Etrade account that I was going to start looking for somewhere to invest it. I don't use the account hardly at all, but I just sold some stuff today and wanted to look for any new opportunities.
I have done decently well applying Graham's principles in my longer term stuff, and a lot of the stuff I hold could be considered distressed. 1 thing to be aware of is the difference between buying distressed 'price' vs 'value'. Without writing a lengthy explanation of Graham's ideas and net nets, and Buffett's evolution of that, a simple example will suffice.
Something like TEF is a value play, something like DHT is a price play. The former although being beaten down and having exposure to a weak region in the world, still throws off massive FCF and has a growing segment of its top line from the expanding 3rd world. The latter which is an absolute dog with fleas faces crushing debt and minimal revenue.
Just because something is in the 95th percentile of losers or worse doesn't mean its unworthy to buy. Do understand if you are buying because price has fallen a lot or if intrinsic value has actually changed.
Something like TEF is a value play, something like DHT is a price play. The former although being beaten down and having exposure to a weak region in the world, still throws off massive FCF and has a growing segment of its top line from the expanding 3rd world. The latter which is an absolute dog with fleas faces crushing debt and minimal revenue.
Just because something is in the 95th percentile of losers or worse doesn't mean its unworthy to buy. Do understand if you are buying because price has fallen a lot or if intrinsic value has actually changed.
re picking bottoms in distressed stocks, it's must easier financially and emotionally to wait for a bottom to be proven and price is starting to go up like above the 50 DMA. so many bad trades would have been prevented by simply waiting for this confirmation.