Tuesday, March 19, 2013

G. Willi Rises

Just six months ago, G. Willi-Food was brought up on this site as a potential value investment. The stock has since rallied some 65%, offering investors an excellent exit opportunity.

There's nothing flashy about this company. It's not on the cutting edge of cloud computing, nor is it on the cusp of a biotech breakthrough. And yet an incredible 65% return over just six months was available for investors in this little-known developer and distributor of Kosher groceries.

Moreover, unlike investors in the hottest industries, I would argue that investors weren't even taking a big risk in this company either. If sales hadn't improved or gross margins hadn't returned to normal, investors were still protected on the downside by a sizable cash position, suggesting the return profile of this company was asymmetric (i.e. heads I win, tails I don't lose much).

Following the big price move, the company now trades at around its book value. You could make the case that the company is still undervalued, but that's just quibbling; the easiest, least risky returns have already been made.

Why do such opportunities exist? I don't really know. But they do! G. Willi becomes the latest stock from the Stock Ideas list to move to the Value In Action list.

Happy investing!

Disclosure: No position

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