Just three months ago, the stenchy shares of iGo were brought up on this site as a potential value investment. Today, those shares smell almost 40% better, even though the company's operations have only gotten worse.
Shareholders may have gotten a bit lucky in this one, as a buyer for 44% of iGO's shares has emerged. But if you put the odds in your favour, which is what you're doing when you buy companies for less than the cash on their balance sheets, good luck is likely to pay you more than bad luck is likely to cost you, over the long-term. A timely study by Alon Bochman on the subject serves as proof.
Sometimes it isn't easy to buy these negative enterprise value stocks, however. This is because they are usually bleeding cash. But if you buy at enough of a discount, perhaps you can wait around for the bleeding to stop. Or perhaps, as in this case, you get lucky and someone buys the cash off of you.
Either way, when the expectations are extremely low, that's when you want to be a buyer.
Disclosure: No position