acting in concert - investing in stocksacting in concert is similair to accommodation tradingand happens when two or more entities or people invest together in the same asset to try and achieve a desired outcome. Many times these are used for investors or companies to try and buy out or achieve controlling interest of shares in a company. Controlling interest of shares means that a person, entity, or group of people owns more than 50% of the shares outstanding. As small investors we must think about whether or not the company we invest has a chance of being taken over or if other investors will start acting in concert to gather controlling interest. This scenario is of course way more likely to happen in smaller to mid cap companies because they are simply cheaper to take over compared to large cap companies like have billions in market capital. The good news is however during any takeover the investors working in concert to buy interest in the business must state their intentions to the SEC.Comments: Laws like this are made to try and protect little guy investors so as to keep the larger investors from damaging the smaller amounts of equity owned by the little guy. The thing to remember is that this is not necessarily BAD especially if the buyout gives you a profit. So what companies then have the best chance of being bought about besides just generalizing and saying the small ones? The first thing to look for are companies that have a higher book value than the current market price; this is just common sense it a company is trading way bellow it’s book value then it stands to reason that if the company is liquidated of it’s assets you could make a profit, hence it may be bought. The second thing to look for is companies that have more CASH per share than the market price, which is VERY RARE however it does happen and is considered by Buffet to be on of the SAFEST investments you can make investing in stocks. |