Tal Davidson
Long only, deep value, contrarian, small-cap

Shiloh Industries: When Should You Open A Position In A Cyclical Company?

Yogi Berra is famous for saying: "In theory, there is no difference between theory and practice. In practice, there is". In theory, cyclical companies are better BUY opportunities at the bottom of the cycle, when profits are low, and valuation multiples are high. In practice, it can be very difficult to buy at the bottom of the cycle, as it takes tremendous conviction to bet on a bleeding, often over-leveraged company, not knowing when the pendulum will finally turn. In practice, one is tempted to open a position well into an upward trend, when a company returns to adequate profitability and a reasonable valuation. Buying into a recovery, however, poses its own risks. We shall examine these considerations through the...

Join Seeking Alpha PRO to read this archived article and 11,574 other archived articles
IDEA GENERATORXExclusive access to 10 PRO ideas every day
INVESTING IDEAS LIBRARYXExclusive access to PRO library of more than 15,000 ideas
SECTOR EXPERT NETWORKXExclusive access to all sector experts for direct consultation
PERFORMANCE TRACKINGXTrack performance of all PRO stock ideas
PROFESSIONAL TOOLSXProfessional Idea Filters to zero-in based on industry, market cap and more
"In just the first month of using PRO, I used it to generate two ideas which were actionable for me. As a result of these two positions, I have earned more than 20 times the annual subscription costs for PRO."Michael Yagemann, Greenbridge Capital
"I am pleasantly surprised with the scope of small and mid-cap coverage PRO offers. You can't find that any where else."Patrick Rice, Mainstay Capital Management
You may cancel at any time for any reason, and receive a prompt refund for membership on months paid and not used (max. 6 months). Details