Paragon Shipping: Arbitrage From Irrational Market Valuation
By J. Mintzmyer:Back in August, I wrote a buy recommendation article on Paragon Shipping (PRGN). PRGN traded that day at $1.29 a share, resulting in a six-month loss of 29.1% while the S&P 500 gained 21.5%. In my article, I predicted that PRGN had around 71% upside, just on liquidation value alone. As the stock price has dropped alongside S&P vessel values, PRGN still represents a huge liquidation upside.I am a valuation person: fundamentals, especially balance sheet strength, are my main concern. Obviously, business trajectory and management are also important in this analysis. This approach allowed me to bust Netflix (NFLX), Abrecrombie & Fitch (ANF), and Green Mountain Coffee Roasters (GMCR) last year, while riding Microsoft (MSFT), Intel (INTC), and Aeropostale (ARO) to huge gains. PRGN is a stock that is a "market reject,"; it is going to take big shifts and big news to move this stock in the rightComplete Story »
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