Five signs your stock is a 'value trap'

In the past, we have noted one of the key risks facing value investors is falling into ‘value traps’. Value traps are investments that appear undervalued but turn out to be cheap for a reason, often because a company’s ability to make profits has been severely, and permanently, impaired in some way. Ensuring we do not invest in value-traps is a key part of what we do and so it was instructive to see a recent presentation on the subject by the immensely successful investor Jim Chanos who has made his reputation by shorting the shares of overvalued businesses. Among a number of high-pro...