There's an interesting dynamic unfolding as market jitters continue thanks to escalating coronavirus fears and it's not a new one; it's all about finding the bottom.
This sentiment was last felt in December 2018, when the S&P 500 fell 16% from Dec. 4 to Dec. 24. It was felt briefly in 2018 from Jan. 29 to Feb. 5, when the S&P dropped about 8% (and I can't even remember what the cause of that drop was, which is typical). It was felt prematurely, in a way, in late June 2016 upon the initial announcement of Brexit, but those fears eroded after just a two-day 5% drop. It was most prominent during the 2008-2009 meltdown, and that was a long wait for many.
We are always looking for a market bottom, awaiting every close, looking for signs of progress. There was a small collective sigh of relief on Friday as the S&P 500 finished well off the day's lows, though it was still down 0.8%. That's where sentiment is right now -- a 0.8% drop is a victory.
If you want to know where the bottom is, it's the point at which the current fear abates and there are no other fears standing in the wings to take its place. Did I mention that it's an election year? If you want to drive yourself crazy keeping looking for the bottom. I instead am concentrating on finding names that become stupid cheap.
Meanwhile, despite the focus on the direction of the markets, there are actually other events happening. On Friday, construction name Tutor Perini (TPC) rose 20% on a report that Apollo Global Management (APO) made an offer of $17 a share for the construction company. Tutor Perini closed Friday at $14.50. It has had a rough run the past three years and has slid steadily from about $32 a share in March 2017. Tutor Perini is trading at just 1.19x net current asset value (NCAV) and just 6x next year's consensus estimates. It is a member of my 2020 Double Net Value Portfolio. Double nets, or companies trading at between one and two times NCAV, have been prime hunting ground for takeovers.
The cruise lines, one of the subjects of my Friday column, also had a decent day on Friday as Royal Caribbean Cruises (RCL) (up 4.4%), Norwegian Cruise Line Holdings (NCLH) (up 7.3%) and Carnival Corp. (CCL) (up 5.1%) all posted gains. However, as cheap as they appear now, they may get even cheaper. I don't know what our coming cruise on Royal Caribbean in May will look like, whether we'll be screened before getting on board or need to provide a doctor's note, or at worst whether the cruise will be cancelled. However, I suspect it likely will be business as usual.
