Monday, April 16, 2012

Bassett Furniture Rises Above

Last year at this time, Bassett Furniture (BSET) was discussed on this site as a potential value opportunity. Today, it sits considerably higher, as the stock has risen significantly over the last few weeks despite a declining overall market of late.

Bassett was a bit of a special situation, as an impending deal was about to dramatically increase its cash holdings and book value. But even though the deal ended up going through, Mr. Market barely shrugged his shoulders, and the stock remained in a holding pattern (don't let the jargon fool you, I'm no technical analyst) for the better part of the next year.

Since the beginning of the year, however, the stock is up almost 40%, for no reason I can see. The company continues to lose money, though at a slower pace than before, as the housing market still remains too weak to buoy the results of many a furniture firm.

But to profit off of Mr. Market, you don't necessarily have to understand his line of reasoning. In many cases, I'd argue it's impossible to do so. Whatever the reason, Mr. M has decided that this company should no longer trade near net-net territory. Though the stock still trades at a discount to book value, the least risky money has already been made. Value investors may wish to deploy their profits to companies trading at deeper discounts.

Disclosure: No position

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