Long Shot: Shooting for the Stars
Real Money's Long Shot column is dedicated to trading ideas that are highly risky, but which present an opportunity for significant payoff if they work. Such ideas are sometimes characterized as "lottery tickets" and are for only the most risk-tolerant investors, as the potential for 100% loss is high.Hope springs eternal, so as we enter 2013, do we dare pick through the detritus of the China stock bust? Do we dare take some risk and look among the dozens and dozens of worthless frauds for the one or two China stocks that are actually honest, real companies? Animal spirits are stirring, so let's take a shot!
One of my best stock picks of all time was a discount PC company that was trading at a fraction of the cash on its balance sheet. I had originally played its IPO in 2000, then sold it and forgot about it until the summer of 2001, when I was flipping through charts, saw theirs and wondered what had happened to it. (The company was E-Machines.) The stock had a $25 million market cap, but it had $150 million of cash. It had been losing money, but a new management team installed earlier that year was in the process of turning it around. I ended up making 6x my investment in six months when the company was bought in a tender offer from a director....666 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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