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