John Rogers: ‘Cheap Orphan’ Stocks Appear During High Volatility Markets

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Here’s a great interview with John Rogers of Ariel Investments speaking with Business Insider. During the interview Rogers shares some great insights into how ‘Cheap Orphan’ stocks appear in high volatility environments, saying:

Q4 hedge fund letters, conference, scoops etc

John Rogers
Image source: YouTube Video Screenshot

We try to make volatility our friend. And when we see stocks that are gapping down on maybe where there’s no fundamental change in the long-term economic outlook of that business. Well that creates an opportunity. I think that’s an important thing. So volatility should be something that helps you. On the other hand when stocks spike higher and maybe get overpriced that can be an opportunity for us to trim. Take some profits and move into cheaper companies.

So volatility doesn’t scare us and we think that in this environment where everyone’s been in this flight to safety, More and more investment communities have gotten more and more conservative, so they’re moving money to the safe parts of the marketplace. That means the stocks that are left out can be truly orphaned and be really cheap. So we’re trying to find those ‘cheap orphans’ in this type of environment.

(Source: YouTube)

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Tobias Carlisle is the founder of The Acquirer’s Multiple®. He is also the founder of Acquirers Funds®. The Acquirer’s Multiple® is the valuation ratio used to find attractive takeover candidates.