Alternate Investments - 'Asset Plays'
If we are unable to find the excellent businesses and investing opportunities that we would like, we are comfortable investing in Ben Graham style investments. They include arbitrage or special situation opportunities, also occasionally referred to as 'asset plays'.
These tend to be low risk investments, where the underlying tangible assets of a company (Cash and/or liquid investments) are greater than the market cap. Some of the types of corporate activity that could potentially generate a special situation include; cash takeover offers, special dividends, distributions, in species distributions, or calling general meetings ourselves.
Once a company has taken the initial steps to action a corporate activity, and assuming it passes our in-house asset play criteria, the risks are often relatively small. Nonetheless, in many cases the annualised returns can be highly attractive.
If we do not find any suitable alternative investments, we will not hesitate to hold cash.