The Secret to Finding Hidden Value Plays

There's a secret to finding small pockets of hidden value in this raging bull market. September 26, 2013     The Secret to Finding Hidden Value Plays   Ditching the charts for a value rant… Could you beat this stellar track record? Plus: Going streaking with the S&P   Greg Guenthner coming to you from Toronto, ON... Greg Guenthner There's a secret to finding small pockets of hidden value in this raging bull market. I'll reveal it in just a minute through a late-night conversation I had with my colleague Jonas Elmerraji… Jonas and I are arrived in Toronto yesterday afternoon. We're here to meet with a group of American and Canadian technicians to try to get a clearer read on the markets. We'll spend the day sifting through countless charts and chatting with some of the best minds in the business. I'll have a chance to share my favorite insights with you soon enough… However, since we arrived in Canada last night, Jonas and I haven't been talking about the charts. Instead, our conversation turned to value. After all, that's one of the biggest gripes about this market. Value-seeking investors aren't seeing many bargains out there. Jonas' response? Maybe they aren't looking in the right places… "There are three core factors that'll hold the keys to the biggest gains this year: keeping a deep value focus, sticking with small stocks and buying exciting businesses," Jonas explains. "Value matters. I'll spend $6 to buy $10 worth of assets all day long if I'm given the chance. And right now, there are still plenty of chances to do that." On Jonas' hunt for value plays, he sticks to small-caps—which come with big advantages because of their size. Few analysts cover the smaller stocks on the market, and few mutual funds are even allowed to invest in them. That lack of professional awareness of small caps means that you're far more likely to run across a major mispricing or hidden opportunity in a small cap than you are in a larger name. Jonas isn't just blowing smoke, either. His open gains are at an incredible 90% over the past year. You can't do better than that. In fact, if you can beat Jonas at his own game, he'll pay you double… In the meantime, he'll continue to shred the broad market… "I'll be focusing on deep value small stocks and exciting (easily explained) businesses to keep our market-crushing performance on track for the second half of the year," he says…     Rude Numbers Targets, Predictions and Wild Guesses   15 years ago, a company called Google emerged. The search engine behemoth is expected to take in $39 billion in ad revenue this year – roughly a third of all online advertising sales. Meanwhile… $13 billion will be Samsung's marketing tab by the end of this year. That's more than Google paid to buy all of Motorola. 14,799 is where you'll find the Nikkei this morning. The Japanese index gained more than 1.2% overnight. However… 42 points fell from the Shanghai Composite early this morning. Chinese stocks ended the session down nearly 2%. 5 straight S&P trading sessions have ended in the red. It's now the longest losing streak of the year…     Rude Trends When to Buy... When to Sell   The S&P is streaking this week… As of yesterday's close, the index has now posted its longest losing streak of the year at five trading days. The post-Fed gains are long gone. After September's sharp run-up, the broad market is climbing back down the other side of the peak. But it's not all gloom and doom just yet. A little perspective goes a long way in this market. Technician Ryan Detrick from Schaeffer's Investment Research points out that the current 5-day losing streak has the market down a total of 1.9%. The previous 5-day losing streak (which occurred in late December just as the whole "fiscal cliff" event was roiling the markets) was 2.8%. The slow pullback the market's showing us right now isn't worrying me just yet. I'd rather see the market release some pressure before we get deep into the fourth quarter—as opposed to a massive, unsustainable short-term move. [Ed. Note: Send your feedback here: rude@agorafinancial.com - and follow me on Twitter: @GregGuenthner]     Ignore At Your Own Peril Today's Must Read Links   If you find any of these coins floating around, you may want to begin saving them... Try the Rude Pro for 30 Days, Without Charge The One Retirement Plan Obama Can't Touch     BE SURE TO ADD dr@dailyreckoning.com to your address book.       Additional Articles & Commentary:         To end The Daily Reckoning's Rude Awakening e-mail subscription and associated external offers sent from The Daily Reckoning and The Rude Awakening, click here. Please Note: If you unsubscribe from The Rude Awakening, you will also be unsubscribed from The Daily Reckoning. The Daily Reckoning's Rude Awakening is committed to protecting and respecting your privacy. We do not rent or share your email address. 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