Last Friday, I was chatting on the phone with a friend of mine who is a talented and
logical investor: one of the elite. He and I often trade views on economic trends or discuss companies and stock tips, and this
was just such a day.
He mentioned having recently bought a company called “Viterra,” which has a virtual monopoly on grain storage and shipping in central Canada. He said that its price had dropped in recent quarters, and went through a short burst of statistics to back up his “great buy” claim, including earnings history, price to book value, and the nature of the industry. I told him I’d check it out, and we each hung up the phone.
It only took a couple of minutes for me to realize that Viterra was indeed a great company at a great price, so I put in a limit order well above the current bid (at $11.50), to make sure I’d get in. Then I hit the "enter" key and sat back. But strangely, it didn’t fill.
I looked at my screen in disbelief as I read that trading had been halted pending an announcement. The newswire then announced that “certain parties” had expressed interest in buying the company. When the stock resumed trading a few minutes later, Viterra stock had jumped 29.8% to over $14 a share. My order (at a now-measly $11.50) didn't fill. Dammit!
Needless to say, my friend called back a couple of minutes later to casually jab me about my lost opportunity (“I didn’t know this would happen. Honestly!”)
Shortly after that, I called him back to let him know that the transaction just made the cover story for the Globe and Mail’s online business section.
I completely missed out.
He mentioned having recently bought a company called “Viterra,” which has a virtual monopoly on grain storage and shipping in central Canada. He said that its price had dropped in recent quarters, and went through a short burst of statistics to back up his “great buy” claim, including earnings history, price to book value, and the nature of the industry. I told him I’d check it out, and we each hung up the phone.
It only took a couple of minutes for me to realize that Viterra was indeed a great company at a great price, so I put in a limit order well above the current bid (at $11.50), to make sure I’d get in. Then I hit the "enter" key and sat back. But strangely, it didn’t fill.
I looked at my screen in disbelief as I read that trading had been halted pending an announcement. The newswire then announced that “certain parties” had expressed interest in buying the company. When the stock resumed trading a few minutes later, Viterra stock had jumped 29.8% to over $14 a share. My order (at a now-measly $11.50) didn't fill. Dammit!
Needless to say, my friend called back a couple of minutes later to casually jab me about my lost opportunity (“I didn’t know this would happen. Honestly!”)
Shortly after that, I called him back to let him know that the transaction just made the cover story for the Globe and Mail’s online business section.
I completely missed out.
Lesson of the day: solid, undervalued companies do not stay that way forever. Don't wait to buy.
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“We didn’t lose the game; we just ran out of time.”
Vince Lombardi
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