Here's a typical
Insiders Plus recommendation.
In the spring of 2006, we noticed a Peruvian gold
mining company called Compania de Minas
Buenaventura that was selling at a P/E of 11,
while most gold miners were selling at P/Es of 30 or
more. So, right from the outset, we had a stock
selling at about one-third the sector valuation, and
about 40% less than the market multiple. Moreover,
the stock had fallen 25% in recent months. Our
curiosity aroused, we dug in to uncover why the
stock was so cheap.
We found that the market was frightened silly
that a radical leftist presidential candidate,
Ollanta Humala, would be elected, and that, like his
hero, Hugo Chavez, he’d nationalize resource
industries, like mining. The fear was over a
legitimate issue. But the important question was:
How likely was Humala to be elected?
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Over a period of a few weeks we dug up all the
news on Peruvian politics that we could. It became
obvious that Humala had no chance. The left
was fractionated among many candidates, each one a
favorite in his own region. Meanwhile, the moderates
where solidly behind a single front-runner. The
closer the election got, the more obvious the outcome
was. We initiated our first buy in April of 2006,
and doubled up on our position three months later. Within
a year, the election was a thing of the past and the
stock was up 60%.
Between the 25% drop and the 60% rise in the
stock, the volatility was tremendous. (A rise in
price is volatility too!) But where was the risk?
Was it in the 25% drop that allowed us to buy the
stock dirt cheap? Or was the real risk in the
ignorance or laziness that kept analysts and
investors from finding the truth.
The story of Buenaventura is essentially the
story of our success. It is very typical of what we
do at Insiders Plus.
Incidentally, as of this writing, we have two positions in
the stock. One is up 76% and the other is up 52.9%.
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A subscription to Insiders Plus is $300
for one year or $500 for two years. All
subscriptions are guaranteed. If you are not
satisfied with your membership for any reason within
the first 30 days, we’ll refund your full
subscription price. A pro-rated refund is available
any time after that.
If you have further questions about Insiders
Plus, please write to us using the "Contact
Jack" link on the left sidebar.
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