DEFINITION of 'Asset Play'

An incorrectly-valued stock that is attractive because its combined asset value is higher than its market capitalization. "Asset play" is a stock market term that refers to a stock that is believed by investors to be undervalued because the current price does not reflect the current value of the corporation's assets. This type of stock is called an asset play because the driving force behind the purchase of the stock is the fact that the company's assets are being offered to the market relatively cheaply, making it an attractive buy or play. Many investors consider asset plays to be sound investments since they are backed by strong assets.

BREAKING DOWN 'Asset Play'

Often, investors who participate in asset plays purchase these stocks in the anticipation of price corrections that will cause the company's market capitalization to increase and, therefore, generate a profit for the investors. Market capitalization is the total dollar market value of all the company's outstanding shares, calculated by multiplying a company's shares outstanding by the current market price of one share. Companies that are asset plays may attract attention from firms interested in takeovers because they can be a relatively inexpensive method of acquiring assets.

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