So far I’ve covered two models of investing – predictable value investing and special situations. This time I’ll cover one more model of investing that I like to look at – asset plays. An asset play is investing in a stock that is undervalued compared to the total current value of the company’s assets. To give you a simple analogy, it’s like a buying a wallet and all its contents for ten bucks when you know it already contains twenty dollars cash inside. When you look at an asset play, you need to focus on the management, financials and valuation quadrants. The business model of the company is not much of your concern because you’re interested in the company’s assets and less so its day-to-day business operations.

• Financials. Under the company’s financials, take a look at the assets in question and determine what they are. In my book, there ...

...