20 Statistically Cheap Stocks Worth Researching Further


So all year I have been overly concerned with the economy and have not focused enough on good stock picking which weathers all market environments. I admit it, apologize for it, and am trying to move on with my life…

So, as a way to repent for my sins of caution in late 2010, I am going to disclose a brief list of potentially undervalued issues for your review, and if you are so inclined to purchase said equity for 2011, it is your own decision to invest and you should take complete credit for any of the money you earn.

In this way, I can make you some money as payback for my caution and without being blamed for a particular company’s decision to commit fraud or blow through investor cash partying on the shareholder dime – you have to research stocks constantly to make any money, and likewise it takes some guts to hold your best stocks through thick and thin, while getting out of the companies that eventually destroy shareholder capital (whether the management team was drunk or sober).

The following list contains names of statistically undervalued equities, but some names are turnarounds and riskier investments or have potentially drunken management teams to keep an eye on (after all, 1 in 10 Americans have a problem with alcohol; this means that management at two of these companies should statistically be drunk right now (although I have to adjust for the Chinese solar firms):

  1. AHL – Aspen Insurance Holdings is a reinsurance firm which trades at just 64% of tangible book value. AHL has less deferred policy acquisition assets then NWLI and has a higher ROE. Although the earnings statements for AHL are “lumpy” the company is statistically cheap.
  2. GLRE – Greenlight RE trades at 7X analyst projected

This article was written by

WWW.JAGUARALPHA.COM          Protecting and preserving capital (purchasing power) over the long term is more important to me than growing capital. Main research focus relates to investment risks and how to hedge against them inexpensively. In most market environments I'm a fan of buying undervalued stocks of good companies and holding for long periods of time. In today's environment, delta hedging via options and risk management is more of the focus. When the facts change, so will my focus. I don't give "tips" or make recommendations... unbiased analysis on etf's stocks and bonds but do not tell readers whether to buy, sell, or hold. Some articles will list ten well known stocks and describe our general investment theme without "picking" stocks -- this leads to confusion for those trying to "rank" my analysis. By definition, these articles analysis and rants are meant to help readers analyze data sets and make their own decisions. Generally, we are permabulls. However, we focus on risks and hedging them in these articles because many stocks go to zero. We've seen it happen and want to teach not only from successes but also from our many failures.Interests include researching cheap stocks of high quality companies, GARP stocks, Magic Formula names, and stocks trading below intrinsic value. Participate long only without hedge when overall bull market is trading for a CAPE under 20 (Tobin's Q under .8X) or when blood is in the streets (not dip buyers), but strive to cut losers early when the facts change and refuse to marry long or short positions unless a "holding period of forever" makes sense. Hunches must be backed up by disciplined systems. In fully valued markets, we prefer hedging via index options and light commodity trading/trend following. Not interested in participating in latest fad or bubble. Prefer to short the bubble, but only after evidence suggests the bubble has popped. Prefer to hedge any long positions in frothy markets utilizing a balanced long short equity approach in fairly valued markets. In undervalued markets, we need confirmation from market conditions and valuations in order to invest 100% long (or more) using in the money call options for leverage. Covered calls, calendar spreads, and other options strategies for capturing theta decay. Cut losers on short side by using ITM put options instead of stock, trend following strategies if trading commodities (for diversification). Fundamental analysis but also technical analysis. Mathematical, disciplined trading strategies. Strive first off to be right about the overall direction of the market (bull or bear). Hold lots of cash when people are being greedy. Nothing we publish here is a recommendation to buy or sell any security. Please consult your financial advisor before buying or selling any security.

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