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Undervalued Stocks: Buying as the Street Runs Red

Posted by Ian Cooper on April 8, 2008

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"Blood-in-the-streets investing may sound cold, heartless, and a cheap way to make a buck, but we’re investors. We’re looking for the political turmoil… financial hardships… assassinations… bloody uprisings… the events that seed wealth." — Ian Cooper of Pure Energy Trader

by Ian Cooper

Baltimore — (TFN): The following was taken from the 60-Second Buzz on TFN. Watch this video.

Welcome to the 60-Second Buzz. I’m Ian Cooper, editor for SC Trading Pit and Pure Energy Trader.

Blood-in-the-streets investing may sound cold, heartless, and a cheap way to make a buck, but we’re investors. We’re looking for the political turmoil… financial hardships… assassinations… bloody uprisings… the events that seed wealth. So when Bear Stearns imploded on liquidity issues, how could you help but use the crisis-led broad market sell-off as a buying opportunity. At least, that’s what we did at SC Trading Pit.

After a troubling February 2008 incident that took MF Global from $30 to $14, insiders began loading up — including CEO Kevin Davis who bought 60,000 shares between $16.28 and $17.15.

And all was going well… until Bear Stearns got a $2 buyout offer and rumors of MF Global’s demise began circulating. With Bear Stearns, MF Global plummeted 78% on fears that the collapse could spread.

But the sell-off was nothing more than overreaction, and we bought the stock only to watch it snap back two days later. Per Briefing.com: "The company is very well capitalized with $1.4 bln in a committed, undrawn credit facility. As previously announced, as of today, volumes and net revs for the current quarter to date remain at higher levels than in any comparable period during the current fiscal year."

Plus, the company has enough cash ($46.6 billion) to offset debt and no liquidity crisis. This was a stock taken down on nothing more than false rumor, and quickly became a "blood in the streets" buying opportunity, one that helped some SC Trading Pit readers realize a quick 60% gain. But the opportunity to buy hasn’t passed… There’s still a gap to be filled.

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Picking the Best Trades… Trade After Trade

Ian Cooper is the real deal. Since joining our team of experts, Ian has initiated 20 trades in the Pure Energy Trader.

He’s hit 15 winners with 5 losers. Do that math — that’s a winning percentage of 75%. And every trade — even including the losers — is averaging +41%. PureEnergy Trader subscribers are nearly doubling their money every 2 trades!