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 (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...
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