Investment Opportunity 1 – Decent Return Possibility with Little Risk
Company 1 is an investment idea that at first does not look appealing. However, after you look at it closely, you realize that it gives you an opportunity to earn a decent return in a relatively short period of time without taking on too much risk.
The bad thing is that this idea is not something that will give you multi-bagger returns, but in this market multi-baggers are pretty much nonexistent.
Investment Opportunity 2 – Major Shareholders Said Enough is Enough
When you earn your own money, you can do whatever you want with it. You can invest it, you can save it, or you can spend it in whatever way you want. There is no one that is in control of it but you. However, when you take someone else’s money, then that money always comes with strings attached.
This is especially true with publicly traded companies that are owned by various shareholders. When these individuals invest their capital, they expect results. Consequently, the managers of publicly traded companies cannot spend money the same way they would if it belonged to them personally. If they ignore the shareholders, one day, they may wake up and have the rug pulled out from underneath them.
This is exactly what happened with the management of Company 2. For years, shareholders kept watching the company’s cash being wasted by the management. Finally, they said, enough is enough. We want control.
Investment Opportunity 3 – The Founder Took the Reins
Usually when change is needed, it is an activist hedge fund that shakes things up through a proxy fight. In the case of Company 3, change was definitely needed because too many promises were broken. However, instead of a hedge fund, it was the founder himself that removed the board of directors and forced the CEO to step down so that he could execute on a strategy that would unlock shareholders’ value.
The reason why change was needed was because the company was not reaching its potential. It was providing successful products to a wonderful client base, but this was not enough to be profitable.
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