Sometimes holding company stocks trade at a discount to a sum of the parts even if the parts are individually publicly traded. Traditional commodity arbitrage: “If gold is trading in London at $600 per ounce and is changing hands at $610 per ounce in New York City, an arbitrageur can buy in London and immediately sell in New York, capturing the spread.”Ĭorrelated stock arbitrage: “This type of arbitrage exists in a variety of stocks. The elimination of downside risk, even if upside is limited, is awesome – and that’s exactly what arbitrage gives us.” With arbitrage, we get decent returns with virtually no risk. “Arbitrage is a powerful construct and a fundamental tool in the arsenal of any value investor. Last, but certainly not least, read The Little Book That Beats the Market by Joel Greenblatt.VIC is loaded with a plethora of fifty-cent dollars. Take a look at Value Investors Club (VIC ).If you’d like to avoid the subscription price tag for Portfolio Reports, then much of that data can be gleaned by looking directly at the public filings (e.g., SEC Form 13-F) that institutional investors have to make.It lists the 10 most recent stock purchases by 80 of the top value managers. There is a publication called Portfolio Reports ( ) that is published monthly.This list of 40 stocks routinely shows price drops of 20 percent to 70 percent over that period. It is another terrific indicator of distress. Value Line publishes a weekly summary of the stocks that have lost the most value in the preceding 13 weeks.If you are a person who follows the news, negative stories and headlines about publicly traded businesses can be a source to find distressed businesses and industries.There are many ways to get a list of distressed businesses or industries.
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