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Deep Value Investing: Finding bargain shares with big potential by Jeroen Bos

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CHAPTER 11. ABBEYCREST

Bought at: 60p (August 2004)

Sold at: 2p (June 2011)

Shares suspended: January 2012

I HAVE EXPERIENCED A FEW investments over the years – and luckily only a few – that looked attractive at the outset but turned into value traps as time passed. One of these was Abbeycrest, the subject of this chapter. Its major problem – also afflicting Alexon Group, another value trap I have tangled with – was an erosion of its working capital, leading to all kinds of trouble.

This is a danger facing all potential value investments. It lurks beneath the comfort of a high net asset value compared to the share price. Marginal profits or losses can seem quite sustainable in the face of this. The hope is simply that better times can be found ...

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