It’s hard to believe that the S&P 500 surpassed 1,500 today. I’m starting to question the margin of safety on all my holdings now. Unilever PLC (UL) , my best performing position since I started the Fat Pitch Financials Portfolio, was up over 3% today and is now trading about $32. I was having trouble finding value opportunities, but now I’m wondering if I may need to start selling and increasing my investments in special situation opportunities.
This weekend I read an article in Barron’s titled, “Buckle Up!” by Jack Willoughby. In that article, Mr. Willoughby reports that nearly 65% of money managers say it’s hard to find attractive stocks. I found comfort in the following comment by Himanshu Shah, founder of Shah Capital Management, confirming my own thoughts:
“This market is not cheap by any measure. The pendulum has swung since 2002, and prices have been bid up by the presence of private-equity buyers and the anticipation of bids. The search for value now amounts to special situations.”
If you too have resorted to searching for value in special situations, not that that is a bad thing, join me and the other members of Contributor’s Corner in our pursuit of these opportunities.