Hi gcrispin
Capitulated Volume some more examples -
One of the best contrarian plays is finding companies that have fallen significantly with waves of huge volume sells, then patiently accumulating shares waiting for the eventual recovery. The key is to determine that a lower low was achieved on lower volume. This signals that everybody has thrown in the towel and some type of recovery will begin. The recovery generally takes several months (18 months is typical) (and even a few years) but IF the company survives, it is usually stronger w/ new management.
If one is patient, you can make a multi-bagger.
Here are a few examples I have invested in and continue to own.
GLW (Corning) finance.yahoo.com 
GLW peaked in 2000 trading at over $100 but was caught in the "Dot.com" implosion. The company invested billions of dollars in their telecommunication fiber optic division only to see their investment go sour. It almost brought the company to bankruptcy and traded as low as $3.50/share in November of 2002. My first buy was at $12.00/share and continued buying down to $4.50/share. I continue to like the company and am holding my shares but will begin to peel off some shares as the stock breaks $30.00.
HAL (HALLIBURTON CO) (http://finance.yahoo.com/q/bc?s=HAL&t=5y&l=on&z=m&q=l&c=)
The company had a judgment against them for asbestos liabilities from one of their subsidiary companies in late 2001. After the climax selling occurred, I looked for the lower low on lower volume and purchased a significant chunk of shares around $9.00 (pre split). It took management around a year to resolve their asbestos problem writing off all potential litigation liabilities and forming a separate Trust company to handle all of the class-action payments. The stock only began to trade to all time highs after the litigation was monitized and written off which was finally resolved in 2004. I sold 90% of my shares but still hold shares that have a market value equivalent to my original purchase in 2001. This was a ten bagger!
EP (EL PASO CORPORATION)
finance.yahoo.com
This was a classic example of a company that had valuable assets but also huge amounts of leveraged debt. The company got caught up in a bubble valuation in their industry and leveraged their company buying up new expensive assets. There were waves of selling as the industry adjusted the valuation(s) and the fear of Enron was in the news. The stock tumbled from $60 to a low of $3.00. I began accumulating shares in February 2003 and March 2003 as the stock hit lower lows on lower volume. All investors lost faith in the company's management as the market was selling shares for pennies on the dollar. I started to buy shares at $7.00, with my lowest chunk around $3.00. The company continued to pay their dividend as they worked to unwind and sell assets to pay down their debt.
I continue to hold my shares and now after three years, their balance sheet is in much better condition and their core assets they were able to control include valuable natural gas reserves and interests in pipe line distribution partnerships.
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My most recent BUY is in WON (Westwood One)http://finance.yahoo.com/q/bc?s=WON&t=2y&l=on&z=m&q=l&c=
The company is in a restructuring mode as their revenue growth has stalled for various reasons. They have brought in a new CEO and have a few quarters behind them that include new capital investments in new business segments (Internet & Mobile services) and the downsizing of their labor integrating new technology to reduce expenses.
I have been accumulating shares at $9 and now more in the $6-$7 range but am focused on two specific events. First, two very large investors (w/ 7% & 12% ownership interests) have finally sold off their ownership interests leaving CBS as the only major (10% or greater) stockholder. These sales accounted for the large volume spikes and significant price drop in 2006. I believe capitulation has or will occur soon. Look for a lower low on lower volume.
Second, I am waiting for the final quarter of write downs (perhaps it occurred last quarter) where management throws in the sink. The company continues to have excellent free flow cash flow even with the reduction in revenues. Management has used this revenue stream to finance new capital investments and they continue to pay their dividend (now around 5.6%).
I expect that once their new capital investments begin to generate new revenue streams and management has trimmed expenses to be in line with current revenue, WON should be able to grow again but at a bit slower rate than in the past. Fair value s/b around $25-$30 in 18 months. The other option would be for CBS (the last major large shareholder) to buy out WON and integrate it into the current CBS operation. They would only do this if they can buy the company on the cheap (perhaps $12-$15/share).
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I tend to get my ideas from the new lows list, stocks making yearly lows and my best group are stocks making five year lows.
EKS |
