The Strategy Wall Street Doesn’t Want You to Use
Editor’s Note: Today is Veteran’s Day. And on behalf of the entire American Investor Today team, I’d like to honor the brave men and women who’ve served our country. It’s thanks to them that we in America are blessed with liberty, opportunity and prosperity that can’t be matched. If you or a loved one have served, we want to thank you personally for the sacrifices you’ve made in order to ensure our freedoms. God bless! — Nicole Zdzieba, Assistant Managing Editor, Alpha Investor
Who can say they’ve been awarded the Presidential Medal of Freedom … played ping pong with Bill Gates … and even seen their face printed on cans of Cherry Coke?
No one — other than Warren Buffett.
Outside of his extracurricular achievements, you may have heard Buffett being hailed as the greatest investor of all time … and it’s true.
The Oracle of Omaha’s unparalleled success in the stock market has made him one of the richest people in the world. Forbes estimates he’s worth over $83 billion today.
He’s made famously profitable investments in the Washington Post, GEICO and McDonald’s. His holding company, Berkshire Hathaway, owns more than 60 companies on its own. If you’ve been following the markets for a while, you know that his words can have a massive impact.
And as we’ve looked over Buffett’s history of investing, one thing has stood out to us. Buffett’s strategy is all about finding long-term value in places no one else is looking. And one of the best places for that is in something we’ve been talking about for the past few weeks…
Buffett’s Stock-Picking “Secret”
Like our very own Charles Mizrahi, Buffett has made money by taking advantage of special situations.
These are the opportunities in the market with very few competitors — those that appear too complex to most Main Street investors, and too time-consuming to most Wall Streeters.
And there’s one fantastic example we want to tell you about today.
Back in 2000, this “secret” special situation gave Buffett the chance to acquire Moody’s stock, in which Berkshire Hathaway got a $248 million stake.
Moody’s is one of three major credit rating agencies. Corporations pay Moody’s (and other agencies like it) to certify their creditworthiness and assign ratings to their debt.
Since Buffett claimed his stake, the S&P 500 has returned 224% … while Moody’s rose by 2,010%. That’s nearly nine times as much!
You see, this was the result of the special situation that Buffett expertly took advantage of.
Now, you might think there’s no way you could make those kinds of gains unless you already had millions of dollars to invest. But the truth is that you can make profits on even modest investments. But most investors simply don’t know how to locate special-situation stocks…
Finding Success With Special Situations
Over the past couple of weeks in American Investor Today, Charles and I have discussed special situations and the gains you stand to make from them in the stock market.
We’ve shared several types with you so far. And we’ve shown you why Wall Street passes them by. These are things like…
- Complex Companies: Complicated businesses are often overlooked by Wall Streeters who don’t want to take the time to understand how much the company is really worth.
- Small Caps: Stocks with market caps in the range of $500 million to $2 billion are overlooked by professional money because they’re too small. They don’t allow these funds to take sizable positions.
- Micro Caps: These companies are even smaller than small-cap businesses, with market caps under $500 million. With even fewer professional investors interested in them, these companies can be even more undervalued.
- Activist Targets: Activist investors are people who buy large quantities of stock with the goal of shaking up the status quo of a company, putting pressure on its management team and making demands that they think will benefit shareholders. The companies they target can be very profitable.
- Sum of the Parts: This is a valuation method that Charles uses to value each asset or division of a company. The sum of the value for each individual asset is the price that the entire company should be trading at — but often isn’t.
- Hidden Assets: An asset or division of a company can be assigned little to no value, even if it’s potentially worth a lot. These companies can make massive profits when the market wakes up to their value.
All of these special situations create incredible moneymaking opportunities for Main Street investors … and, using his 38 years of experience in the market, Charles keeps an eye on stocks in every one of these areas.
Now, the “secret” situation — the strategy that Buffett used — can bring investors even more impressive gains.
These are gains with life-changing profit potential.
And Charles wants everyone to be able to take advantage. That’s why he’s been working behind the scenes here to bring this secret to every investor. We’ll be telling you more about this tomorrow — we’ll show you how you can get involved.
You do not want to miss out on this, so be sure to stay tuned!