Asset Play

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Play

    A slang term that describes the positive aspects of an investment ...
  2. Valuation

    The process of determining the current worth of an asset or company. ...
  3. Fundamental Analysis

    A method of evaluating a security that entails attempting to ...
  4. Market Capitalization

    The total dollar market value of all of a company's outstanding ...
  5. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
  6. Sum-Of-Parts Valuation

    Valuing a company by determining what its divisions would be ...
Related Articles
  1. Introduction to Types of Trading: Fundamental ...
    Trading Strategies

    Introduction to Types of Trading: Fundamental ...

  2. Introduction To Fundamental Analysis
    Markets

    Introduction To Fundamental Analysis

  3. War's Influence On Wall Street
    Bonds & Fixed Income

    War's Influence On Wall Street

  4. What You Need To Know About Net Neutrality
    Stock Analysis

    What You Need To Know About Net Neutrality

comments powered by Disqus
Hot Definitions
  1. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  2. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  3. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  4. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  5. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  6. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
Trading Center