DNA extraction (Photo credit: col&tasha)
Every week we look for investment ideas using a series of simple, yet powerful, screens. The goal eventual goal is to identify situations where a billionaire investor has amassed a large stake in a deeply undervalued stock since these investors tend to be very good at using their power, as large shareholders, to influence change at companies. Many times, that results in unlocking pent-up value in stocks.
In addition to searching through SEC filings for investors that are building controlling interests in companies, we like to run a series of screens to see if we might be able to back into stocks that meet our criteria (deeply undervalued with the presence of a large influential invest0r). Here’s an example of a screen:
First, we look for companies with a market capitalization greater than $100 million. For the second level of the screen, the companies much have more than three analysts covering the stock. Third, there has to be more than three analysts that have a price target on the stock. Finally, we want to find stocks that are trading at a huge discount to analyst consensus price targets.
In running this screen for this first week of September, the following four stocks have hit our radar as high potential, deep value candidates. These stocks have an average analyst price target that is at least 200% higher than its current share price.
1) ImmunoCellar Therapeutics, Ltd. has a current share price $2.78. The consensus analyst target price is $10.25. That gives us a “street projected return” of 268%.
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This gives us a great starting point to identify a stock that may be deeply undervalued and may have the presence of a large influential shareholder that is fighting to unlock value. If so, it doesn’t hurt that we would have Wall Street behind it too.
Bryan Rich is co-founder of BillionairesPortfolio.com and CEO of Logic Fund Management, Inc.
