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Finance: What is a Special Situation? 0 Views


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What is a Special Situation? A special situation is a scenario where buyers for a security increase not because of the the company’s fundamentals, but due to perceived opportunity from other circumstances. These can include events such as a forthcoming spinoff, merger, tender offer, a competitor’s impending bankruptcy, litigation, or other outside the norm instance.

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Transcript

00:00

Finance allah shmoop what is a special situation Lebron michael

00:09

Either one tiger at least back in the day when

00:12

he had hair All special situations Not normal Well investing

00:16

has the same anomalies crazy events that aren't predictable in

00:19

which offer investors the allure of outsized gains if they're

00:22

smart and lucky and analyzing and taking advantage of the

00:25

situation Special situations arise when business events hit a company

00:33

which carry enormous weight in the press but really don't

00:35

matter to the business itself like you have a headline

00:38

of someone finding a fly in their bottle of catch

00:41

up The notion is who were the so tons of

00:44

bloggers and journalists and tweeters all discuss it Show pictures

00:48

of it Talk about the horror the horror And then

00:51

there's a vaguely hinted that investigation that a congressman in

00:54

a city you've never heard of mumbles to get the

00:57

press to notice her And for about twelve hours ketchup

01:00

sales of that brand and maybe others dropped by five

01:03

percent And that's about it The ketchup company that was

01:05

supposed to have a billion dollars in sales this year

01:07

will now have only nine hundred ninety nine million nine

01:11

hundred eighty two thousand in sales this year Yeah the

01:14

flight cost them eighteen grand but their stock Whoa look

01:18

what happened It dropped from eighty two dollars a shared

01:20

a sixty two dollars a share Almost overnight the crisis

01:24

in the press crushed popular sentiment for a few days

01:27

and investors in the heat of things like when the

01:29

stock was plummeting Would have to figure out if this

01:32

fly in the ointment was a one in a million

01:34

event or something systemic where we'd find a new fly

01:37

in the catch up every other week Or was it

01:39

put there by an angry u S Citizen who simply

01:42

had something against baseball ketchup apple pie and chevrolet like

01:45

Was it sabotage All right well the time to invest

01:48

would have been when this situation was special and everyone

01:51

was panicking And you kept your head about you while

01:54

others were losing theirs Yeah being a smart investor And

01:57

you didn't pay attention to any of the noise or

02:00

uh

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