In all sectors of the economy and markets, very successful investors look for “special situations” in value. These special situations occur in all markets- from publicly traded companies to private investments such as family owned businesses or real estate. A “special situation” may be a tool manufacture in Ohio, a manufacturer of farm equipment in Ontario, a petroleum company in Texas or an apartment complex in Florida. They occur in markets all over the world. One thing that they have in common is that they are undervalued and overlooked at one time or another.

  Why are they undervalued? Companies may attract little attention if there is no brokerage house research coverage. The fact is that brokerage houses are limited in their capacity to cover companies by sheer numbers. Note that there are over 20 thousand publicly traded companies in North America. Bottom line? Few people are aware of them so they literally fall through the cracks. So many companies are in the investment arena that it is impossible to monitor them thoroughly.

  The fact is that few people are familiar with them. Moreover, most brokerage houses do not research low priced stocks. At under $5 a share, most brokerages do not wish to cover companies on a research basis nor will they allow their brokers to invest in them. So they remain overlooked…….and often may be markedly undervalued.

  However, research information is readily available that does not carry with it a high visibility “recommendation” of a brokerage house. Thus, one often has to do the analysis oneself. We should add that with all the information that it available on the internet, most investors can do it quite well.

   Most brokerage houses do not cover low priced (and quite often undervalued) companies because many are not liquid. A single “buy” recommendation or simply one purchase can easily cause a large percentage move up in a stock’s (s) price. Very often, few shares of companies are available for sale at price lows.

                                         As for the Mining Stocks? Undervalued Assets!

  If we carefully analyze mining companies, particularly exploration companies, we may find companies having exceptionally undervalued assets. And today, on the internet, a great deal of valuable information can be found. Investment newsletters can provide excellent information as well. 

   We will look at the indicators that could indicate undervaluation. Of course, there are no guarantees in this analysis, but you may be pleasantly surprised at what you can accomplish.

    What we are trying to point out is that the brutal decline in the mining stocks may represent one of the great buying opportunities of the decade. Generally, few investors will take advantage of it, that’s the way it has always been. Next step is to list some of the indicators that some investors use to determine if a stock can be classified as having “undervalued assets.”

                         In part 2, we will list some of the fundamental tools that can help.