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Cheap Stocks with Catalysts are the Key to Outstanding Investment Returns by TMFDeeJ aka Jason Knapp
Value investors are constantly on the lookout for cheap stocks. Special situation investors are a special subset of the value investing clan. For them, the fact that a stock is cheap is not enough to encourage them to buy it. For special situation investors, there must be some sort of catalyst that will theoretically cause the stock to become less cheap in the future, resulting in significant gains…cheap with a catalyst. The recent rise in activist investors has made the job of independent special situation investors easier to a certain extent. Rather than just finding cheap stocks and crossing one’s fingers that a company’s entrenched management will to something that might involve splitting up their fiefdom to unlock value, activists agitate change.