One thing I look for in security selection are prices that are experiencing a large, temporary dislocation for specious reasons, rather than for any significant change in the underlying value of the business.
In the case of Rosetta Stone (NYSE:RST), shares sold off drastically in November due, in part, to one of its private equity investors, ABS Capital, being forced to sell a large block of shares as it wound down its liquidating trust in which RST shares were held. Typically, PE funds invest with a certain time horizon - usually 7 years. Therefore, I understand that ABS Capital was selling for no other reason than because it was forced to sell (it acquired its stake in...
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