Investing in the Undervalued

We are always on the lookout for "special situations," here at Portfolio Guru, LLC; however, they have to be exceptional to outperform the currently frothy stock market. In reality, we are looking for companies that have been punished by the market and are offering value vs. the perceived worth of their assets.

On Monday, I wrote about Gastar Exploration (GST), whose shares -- common and preferred -- were weighed down by litigation with Chesapeake Utilities (CHK), which has since been settled. This is an example of the types of special situations my company looks for, and it proved to be an investable event. Another example in the oil patch is Magnum Hunter Resources (MHR). In this case, the investable event was the company's decision to fire PwC as its auditors. This came on the heels of massive delays in the company's filing of its 2012 10-K. (It was due March 1 under Securities and Exchange Commission (SEC) regulations but it still hasn't been filed.)...498 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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