We’ve come across a potentially hot information arbitrage (InfoArb) play that has the makings of a multi-bagger if the company lives up to its implied valuation conveyed to premium members yesterday morning.
InfoArb is a term we like to use when publicly available information is either undiscovered or underfollowed by the market at large. In cases where this InfoArb tells us that the valuation of a company is mispriced due to a variety of factors, there is a likely Call to Action (CTA) that will eventually be issued.
These factors can include information present in conference calls that are flat out missed by those who do not participate, small snippets of verbiage that are overlooked in filings, public interviews that are not widely disseminated and even research shared with us by some of our members.
We’ve used this concept to find some of our best investments, and although not every one of our ideas in this realm have panned out, most have played quite handsomely. In light of this, we know that the value of having and acting on this information far outweighs the caveats.
Our latest idea involves a company that manages and invests in a diverse range of equity, corporate debt and real estate. It provides capital to businesses engaged in restructuring, recapitalization, management buy-outs and commercial real estate. We noticed some significant details in the SEC filings of a company in which it invests. Once this story goes mainstream, we think it may push shares much higher.
In fact, we think that there is a chance that it rises 8x its current trading price of near $1.00 per share (as of today), putting it at $8.00 per share. While this is speculative and depends of a number of factors we are digging into, it’s a bet we may act on, pending further information we glean from future filings, disclosures and valuation analysis.
Here are some stats of past information arbitrage investments and calls to action.
BLBDW, +125% – See case study
ESCC, 1314% – See case study
GLDC, 100% – See case study
Want more insight? Log in below with your Premium Account to read more on this Information Arbitrage play. Or join GeoInvesting and please become an Annual or Bi-Annual Member to continue.