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I wrote " The index funds and ETF's have distorted things and bifurcated the market."

You wrote, "While this is a popular opinion these days, it seems pretty clear that this is not backed by the data. Dumb money/Indexing is not leading the bull market rally.

Naj, just to be clear, the point I was making about a bifurcated market is that passive index funds and ETF's are more richly priced than stocks not in any index (i.e., a bifurcated market). Vanguard and BlackRock are managing trillions of dollars and growing far faster than any of their competitors, who are also shifting more of their assets into passive. When stocks are included in an index or known to be included, they usually go up in price. The opposite is also true when they get tossed, so to my way of thinking, there are 2 markets and one is more expensive than the other. Many stocks not in any index are ignored, unloved, and cheap.

Now there is no free lunch in the swamp I play in. Yes, I can find some incredibly cheap stocks, but they all come with some baggage and on the top of that list is often shareholder-unfriendly management. Many of these managers are company founders and treat their companies like they are private.

I've been accumulating a stock for the past 18 months where they have $5/share in net cash and were selling far below that level (a dime, yes 10 cents a share). It's actually a well managed small business (<10x earnings) with an excellent product and they treat their employees very well, but have given absolute no consideration to their shareholders. My plan is to eventually buy 20% of the float below their net cash and then make a few recommendations that would be a win-win for all parties.

Now sometimes they are amenable to listening and acting upon something that makes a lot of sense, but other times you are treated like a skunk at a picnic. Last year, I perfected my appraisal rights for the first time with another company that was squeezing out minority shareholders at a terribly unfair price. I had never done this before, so it was an education, but the price was so egregious, something had to be done. Unfortunately, some founders of small companies know the their minority shareholders will complain but then sheepishly accept a low ball offer because they don't know they have viable options. I was the only one seeking appraisal rights and it worked out very well, so another arrow in the quiver to be used when the next management shyster tries to pull a fast one. (My guess it will be Phil Falcone with my DBMG holdings, but I'm ready!)
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