New Management and Corporate Restructuring

New Management and Corporate Restructuring

One of my core investing themes has always been ‘Wager Value’…Borrowing from one of my earlier blog posts, I describes it as follows…

‘Back in the eighties I use to go to the racetrack to bet on Thoroughbred Racehorses. It was a good training ground for investing in the stock market. I came across a term by handicapping author, James Cramer. He called it Wager Value.  Essentially it meant focusing on information that other handicappers aren’t using. Whereas most people who went to the track used speed ratings and the horse’s current form shown in the past performance tables, Cramer like Stephen Davidowitz before him focused on trainer patterns, track bias and result charts. He reasoned that if he based his handicapping (estimating probabilities) on underused information, the horses he would come up with would help provide him with more attractive odds. So he might estimate a horse’s chances of winning to be 3-1 while the tote board (based on everybody else opinion) would have the same horse going off at 8-1. This is the very heart of handicapping a horse race, betting on the horse who has the best chance of winning relative to his odds.’

Likewise, when investing in the stock market, it pays to focus on information that most other people are not paying attention too. Over the years I’ve found that following up on new management teams that are in the process of restructuring their new company can be a potent ‘handicapping angle’ to use when looking to generate new investing ideas. Often these types of companies are under-performing so are more or less ignored by the mainstream investing public. It is also a good idea to check where the 'new management' came from and their track record while there.

Without getting into the specifics…what follows is a short list of interesting investing ideas where this idea currently applies.

Rogers Sugar Inc.

RSI on the TSX

Baylin Technologies Inc.

BYL on the TSX

ATS Automation Tooling Systems Inc.

ATA on the TSX

Velan Inc
VLN on theTSX

Centric Health
CHH on the TSX

GrafTech International LTD.

EAF on the NYSE

For my own frame of reference of course...