Special Situations & Market Inefficiencies

Special situations and market inefficiencies can be highly contrarian investments that offer price appreciation. Typically, these investments: 

  • Fly under the radar,
  • Are “too complicated” to understand, or
  • Go against overall investor psychology.

Spotting these opportunities takes great effort but may reap tremendous rewards.

Special Situations

  • Introduction of a new, exciting product
  • Hiring of improved management
  • Reinstatement of dividend or interest payment
  • Buyout expectations
  • Redeployment of assets to unlock value
  • Corporate restructuring
  • Government legislation

Market Inefficiencies

  • Fear surrounding an event
  • Extreme media hype
  • Global crisis
  • Lack of coverage/Illiquidity
  • Tax loss selling
  • Index rebalancing
  • Investment complexity