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Non-Tech : SPIN-OFFS "secret hiding places of stock market profits" -- Ignore unavailable to you. Want to Upgrade?

To: 249443 who wrote (958)	5/25/2006 8:16:25 PM
From: JimLudlow	Read Replies (1) \| Respond to of 1185

Nothing wrong with that reply. However, for my final post here, I wish to give a more extensive reply. The important thing: watch the insiders. I simply cannot overemphasize this. It is the difference between mediocre/average returns and superior returns. Through experience and examples, you will learn to identify insider motives and figure out why they act when they act. You get clues from the form 3's, 13's, 14A's etc. But you have to sit and figure it out by lots of pondering - they are not going to blatantly tell you what they are doing. The numbers are important, but if you don't throw in the insider motives, you're missing most of the story. [A good recent example of this is TCMI - see my recent posts why it was going to be great, also see replies by others and why they missed the real story. Another example is OFLX which I talked about last summer and look at the responses.] All these restructurings are brought about by insiders for their financial advantage - they're selfish!!!. They really don't want you to be riding with them. The best you can hope for is to ride on the back bumper of their car while they drive away. But if you can't figure what they're up to, you're going to be walking, not riding. With time you'll also get to where you can spot the false moves too. That's so awfully important. So what can you expect? If you can decipher what the insiders are really doing AND why, then only 5 or 6 or 7 deals out of the 40 to 60 annual spinoffs are going to make obvious sense to you. They're the ones worth your while. Then add in some rights offerings, emerging from bankruptcies, asset sales and liquidations and you should be getting close to 25% per annum returns. Then with some more experience and wisdom/judgment, the 50% annual gains will appear. Then the problem changes - now you have to be careful and stay humble - don't get to thinking you know it all and don't short-cut the methods that got you there. It will take WORK and experimentation. Personally, I don't think I started catching on until my third year of special situations. The 50%'s annual returns didn't start appearing regularly until my fifth year. I thought about managing some OPM, but I'm convinced to do really well you have to be very small - under $3 million - and if you manage OPM you'll end up explaining what you're doing more than doing it. So I just do my IRA's + my parents. I simply cannot thank Joel Greenblatt enough for sharing the secrets of how to think with us all. It's made all the difference in my life. The downside? First, I feel kinda alone. There's no one to bounce ideas off and to check my thinking. The people on this board are very, very nice, but let's be candid - posting news articles and listing spinoffs is not very hard if you can google. I tried to be provocative (devil's advocate) a couple of times - shared some analysis a few other times - no one took the bait. No big deal, I did an experiment, now I'm moving on. Second, if one is candid about what one's doing and the returns one is making, one is labeled an obnoxious bragger (which will undoubtedly now happen here) and no one talks to you. So you learn not to talk about it. I accept the downside. Anyway, I hope you get the book, read it 5 or 6 times over the course of a year, make a written summary. Then subscribe to 10K wizard. I'd also recommend a subscription to spinoff profiles so you can watch someone (it's not me) work through some ideas. That's a great way to learn. {Greenblatt subscribed to "the Spinoff Report" for over 20 years - do something similar) Best of luck to all and happy hunting, Jim