Mar. 17 at 12:34 PM
Why buy #2, #3 or#4 when you can buy the leader?
When looking for turnaround stories, one of my core strategies is buying undervalued, income generating players in spaces that are out of style.
I rarely buy the leader either in terms of scale or multiple.
I always buy the #2-5 player.
They tend to be ignored and move slower at first but under the right conditions their rerate can be much more violent.
This is particularly true in fintech/insurtech and energy where you have sofi, first solar and others that suck up all the attention and volume in the space.
But on a 1-year and 2-year view look at how
$TOYO and
$DAVE have outperformed them.
It can sometimes be boring to watch others trade multiple millions of shares a day while these are left in the shadows but markets only stay inefficient for so long.
So if there is a sector you like, don't just jump to the biggest name. Scout out some of the emergent players as long as the fundamentals are sound.
