Bristlemouth

A Value Investing Blog

Posted on 14 Apr 2017 by Kevin Rose

Straight Path to a Pot of Gold

Straight Path to a Pot of Gold

As an investor, I find it important not to let work go wasted. If I spend the time to learn about a company but decide not to invest, I have still acquired a sum of knowledge that may become useful in the future. A better entry point might later present itself, and having that knowledge base makes things easier. This extends to stocks you have owned in the past. It is easy to forget about a stock once it leaves the portfolio. But continue to track it because something might happen to change the risk/reward equation. Beware, though, sometimes you get a humbling.

With that in mind, I provide an update on Straight Path Communications (AMEX:STRP). Long-time investors may remember Straight Path as an investment held in the Forager International Shares Fund back in its early days. We acquired our interest in STRP through a spin off from another Fund holding, IDT Corp (NYSE:IDT). The company did not have any sort of operating business to speak of, but instead owned a portfolio of spectrum assets in the US.

We knew the spectrum was valuable, indeed it provided some of the basis of our initial purchase in IDT’s shares. But quantifying that value was most certainly beyond our expertise. Our best guess pegged an estimated range of $4-24 per share to the portfolio, though we recognised that plenty of outcomes existed either side of that range. We sold our stake in 2014 at $10-11 per share thinking the easy money had been made and our time would be better spent looking for other opportunities.

Yesterday STRP agreed to be acquired by AT&T (NYSE:T) at a price of $95.63 per share. That deep, punch-in-the-gut cringe you feel is the sick, twisted cousin of FOMO. Value investors are bound to experience the feeling every now and then, it comes with the territory. We aim not to chase value to the peak, but to scrape it off the bottom.

Still stings though.

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5 thoughts on “Straight Path to a Pot of Gold

  1. Thanks for that info Kevin. The thing to remember is all the other stocks you could have held onto that would have ” and I mean would” gone down by an equal or maybe greater amount if you treated all your investments as trying to skim every dollar of profit.
    Forager does well because I think the team knows generally “when to quit” and it’s got to remain an “across the board” policy not something that can be skewed by stumbling across some individual hindsight item. That allows emotions to come into play, which I think is the biggest stumbling block to profits in this game.
    Just keep on doing what you’ve been doing, we’re all pretty happy with the results to date.
    Cheers Greg

  2. As another happy Forager investor, I’d have to agree with Greg, (it still hurts though).
    I’ve heard of investors who, (with gains), sell down portions of a stock, until they’ve covered its initial total purchase price, leaving the profits to ‘run’, but I’ve never tried it myself.
    Keep up the good work 🙂

  3. How I feel now when I got out of JIN at $1 seeing the cash burn on the failed global expansion. At least my units in the forager Aussie fund have picked up some of the gain!

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