It has certainly been an interesting market recently. The Dow Jones Industrial Average and the S&P 500 Index are at or near record highs, but there is a wide range in terms of sector performance. Specifically, some of the stocks with the largest growth in the market and the companies that entered the most momentum in 2021 have fallen significantly over the past few weeks.
I decided to take advantage of the bargains in the market by adding stocks to some of my favorite stock positions in my own portfolio. Here are three in particular that I recently added and why I’m so optimistic about each one.
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Looks like the market can’t make up this company
Boston Omaha (NASDAQ: BOMN) is a company unlike any other in the market. Often compared to an early stage Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B), Boston Omaha owns a few subsidiaries, has a minority stake in a few others, and owns a portfolio of common stock investments. It also has a special procurement company, or SPAC, sponsored by it Yellowstone acquisition (NASDAQ: YSAC), who are still looking for a company to publish.
Recent price action highlights the fact that the market does not really know how to value the company. Boston Omaha’s share price rose on very little news from about $ 15 in September to nearly $ 50 earlier in 2021. And since then, it has lost nearly half of its value, even on little news. Sure, the company recently announced a secondary stock offering, but it happened after the recent decline.
Boston Omaha uses the Berkshire model to create long-term shareholder value, with little concern for quick profits. The management team of the company has shown that they are able to allocate capital wisely, and I take advantage of this correction by contributing my position.
A disruptive player in an industry that needs disruption
It may sound strange that the disruption of insurance Lemonade (NYSE: LMND) is almost 50% lower than the 52-week high. The company hit 1 million customers at the end of 2020 and in a fraction of the time, it took some of the largest insurance companies in the market to reach the same milestone. In terms of power, premiums rose 87% year-on-year in the fourth quarter, the company’s loss ratio improved dramatically and its customers spent on average more as time went on.
And most importantly, Lemonade just entered the term life insurance market in the first quarter, and the reviews so far have been fantastic. Life insurance is a fair market of $ 800 billion beg to be disrupted. The process of applying for life insurance is awkward at best and can be aggravating to the point where many people simply give up. If the company can replicate its success in homeownership and rental insurance in the life insurance market, Lemonade’s growth story could still appear in the early chapters.
Keep the faith in Chamath
Technically it is two more shares I added, but I will group them in the same category. While I certainly think the SPAC boom has gone a little too far, I believe the empty check businesses led by top executives are still good places to park money. And this is especially true now, as many of the most watched SPACs have almost evaporated their premium valuations.
So I added the two Chamath Palihapitiya-led SPACs that are still looking for acquisition goals, Social Capital Hedosophia Holdings IV (NYSE: IPOD) and Social Capital Hedosophia Holdings VI (NYSE: IPOF). Both are lower than 52 weeks of $ 18.31 and $ 17.81 respectively, and are now trading at around $ 11.
Although we do not know which companies will eventually announce these SPACs, the risk / reward certainly looks much more attractive now. Remember that these SPACs have about $ 10 per share in trust accounts, which meanwhile offers a bit of a price floor. Palihapitiya’s previous SPACs have a good record – three of the four who identified targets are 70% or more higher than their $ 10 SPAC IPO price, so at a price closer to the level I keep my chances much better , and decided to buy more of both.
Many bargains can be found
These are just a few examples of the companies in my portfolio that have been hit hard in the recent market action. There are many good companies with fast growth, good management and / or large accountable market opportunities to put money to work now. The bottom line is that when stocks you like fall – even if they happen fast and fast – it’s a good opportunity to take advantage, not to be afraid.
This article represents the opinion of the author, who may not be in agreement with the ‘official’ recommendation position of a Motley Fool premium advisory service. We are furry! Questioning an investment thesis – even one of our own – helps us all to think critically about investments and to make decisions that help us become smarter, happier and richer.