Chroma Investing

Value Investing for beginning & small time investors and the value investing strategies of Graham & Klarman

Closed Position in Facet Biotech (FACT) a former Net Net Stock sort of

This is sort of a cheat. I purchased my shares of Facet Bitoech before launching this blog. It does highlight a few ways that I have diverged from the true religion of value investing, while still being a believer. What? I know and I haven’t even started drinking yet.

I purchased 200 shares of FACT on 4/23 at $8.95/share. It looked to me to be a pseudo Net Net stock. What does that mean? It means that when I bought FACT its liquidation value was slightly higher than I bought it for, but it didn’t have a traditional track record or characteristics of a true Net net stock, like a good revenue stream. It was also a spin-off of the drug development operations of PDL Biopharma, doing double duty for me.

Spin offs – Good for Small Time Investors?

For the small time investor, or someone just beginning to invest for themselves, you have to remember to look to see where you have an advantage over other participants in the stock market. Odd lot purchases like the Zerba Systems (ZRBA) purchase are a good start. No mutual fund or hedge fund will waste their time with it, too small of a profit.

What other opportunities are there? The next type of special situation worth looking into are spin-offs. A spin off is when a company decides to split off a subsidiary or division and distribute the stock to its shareholders.

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