Thread: I bought $12 stocks today for $1.19

Sorry it's been a while since I posted (ultra-busy). Despite being "asset rich and cash poor", I scraped together some change and bought a nice big chunk of a property development company here which owns loads of commercial real estate (malls) both here in Australia and the USA (it's the 5th biggest mall owner in the USA). It's so cheap because it's withholding a dividend to preserve some cash, as it's having trouble refinancing $1.3 billion due to your sub-prime credit market making its commercial finance market dry up.

My opinion: the underlying business hasn't changed a bit. 95% occupancy, tenants like Wal-mart and other mega brand names, and maybe just a little added expense to refinance or the possibility of selling an asset or two to cover the time until they do find someone to refinance. I valued the stock based on its expected future cash flows, discounted into today's dollars, at about $10-12. So, I got a 90% discount. Merry Christmas to me :-)

The lesson for me: markets are crazy, wonderful places where emotion can create great bargains. People I've corresponded with in online stock chatting places have really interesting fears and limitations as to why they won't pull the trigger and make a decision. A guy we all probably know over at RD forums (Les Gee) calls this "noise". I think that chat room was running at 200 decibels, since I was about the only one considering buying. One guy bought $30K of stock at about 40c per stock, and was ridiculed a bit, despite being able to sell today for $1.19 if he wanted to (triple his money in a day).

The stock was 40c yesterday or the day before when I started doing my due diligence. I got it for $1.19 today.

Time will tell if I'm right (I'm a fundamental investor, btw).

I hope you are all having a great time :-)

Daniel.

Originally Posted by Rawr

here is some food for thought, if interested:


http://www.blogmaverick.com/2006/01/...vice-for-2006/

http://www.blogmaverick.com/2006/01/...s-for-suckers/

Thanks, it was an interesting read, but I have to say I disagree with a few things in there (eg: avoiding risk, getting out of the stock market). Nevertheless, another viewpoint to consider :-)

Thanks again!

Daniel.

Originally Posted by australianinvestor

Time will tell if I'm right (I'm a fundamental investor, btw).

Daniel.

So how has this worked out for you 9 months on???

Centro to sell 29 US malls at a discount

Centro to sell 29 US malls at a discount | The Australian

Centro's share in US fire sale only $US250m

Centro's share in US fire sale only $US250m | The Australian

Ow.. that hurts all the way over here