Wednesday, February 10, 2016

(Off Topic) Investing and Active Management

So... as an investor you are an owner of a company right? Well I've actually decided to test that theory.

My usual stock picking pattern combines value investing (Benjamin Grahm's P/E suggestions, etc.) with playing off of others fears... Usually resulting in selling off soon. This allows me to buy LOW, and minimize risk. For example, recently oil dropped like crazy, so I went out and found some companies that had value. NADL dropped 25% in one day, I bought it, and it had gone up 8% from my price by the next week. The market aslo drove down FSC, which returned 15%. I always check Yahoo Finance's "market losers" section to find some value stocks, there is great earning there.

But back to ownership, I have recently bought 2 companies that are WAY low priced (and quite frankly don't have too much value). I bought 1100 shares of VPCO and 100 shares of DRYS. Not too much money to risk, but enough for my experiment. So I researched the board of directors, found some contact info for a few of them, and also gather up the Investor Relations contact info.

Basically what my email outlined was that I believed these companies could benefit from adopting Lean Production/Toyota Production System or Six Sigma in their management styles (I even added a little slideshow on TPS and some fancy formatting). I think that by adding these management practices it could increase profits in these companies and gain investor confidence (Dr. Michael Burry, the guy that shorted the housing market, even wrote in his case study that he bought a company called Huttig Building Products because the management adhered to Six Sigma).

The potential is pretty good if it works. My $1.87 equity in 1100 shares of VPCO could become $1100 if it regains its $1 a share position, and I could have similar results with DRYS. So we shall see how it works!