My favorite trade this week comes from the Banking on Profit community, run by value investor - Tim Melvin.
It netted Tim's subscribers 60% (you all know that puts a huge smile on my face).
Tim is without a doubt all about value (expect for maybe his choice of sports teams). When I say value I mean he searches for cheap stocks that have a TBV (tangible book value) of less than 80%.
The Banking on Profit portfolio, specifically, searches for small, (usually regional) cheap stocks in the banking sector that are prime targets for acquisition by larger banks hungry for growth.
Now let's get to the trade:
On June 7th, 2013 (almost exactly one year ago) Tim bought $THRD at a price of $25.43.
The stock was cheap - trading less than 80% TBV (tangible book value) and had solid activist interest.
Then we waited...
For what you might be asking?
"Until the trade works!" - I can just hear Tim in my head right now.
And work it did.
On June 4th the strategy proved to work again (this is the 4th takeover that Tim has captured premium on inside his Banking on Profits portfolio since he started a year ago).
Then there was only one thing left to do...
...sell for a 60% + gain.
They say value is the best way to beat the markets in the long run (Tim tells me this every single time I speak with him) and his results are certainly backing up those claims.
Congrats to Tim Melvin and his Banking on Profit subscribers for executing a solid strategy.
Cheers to the "Trade of the Decade" working for us all again soon. I love watching our subscribers make money in the markets
Have a great weekend everyone.
- Kyle Bazzy