The opportunities are there, but it takes a rigorous investment process to exploit them. It’s an incredibly labor-intensive process to identify those companies, research them and make sure they are, in fact, undervalued and that the market is missing something. The risk-adjusted returns from this space, and that I’ve generated running the strategy, justify the effort.
I identify catalysts as a part of my investment process. I look for companies that have already announced that they’re going to sell assets or that they’re going to do an equity raise that will help them finance substantial growth. Those are some examples of catalysts.