Every once in a while the sea spits out a rare pearl hidden inside of an oyster. Those in the know, understand that the oyster is but the protective shell that hides the gem. For others, it is an oyster and there will be many others like it. The difference between grasping an opportunity and wasting it is simply the case of knowledge.

I have come across too many opportunities in my investment lifetime to know on what to focus. As a small time investor, I try to look at the bottom dollar. That is to say that I am buying a tarnished name with a long term positive outcome. But the ones that I wish to talk about here are those that are on a governmental scale.

One day, while reading the wires, I came across a story of a gem that was too good to pass over but the scale and size where not of the kind I, as an individual, could swallow. It seemed that Forbes magazine was put up for sale. The asking price was about USD 400 million. In terms of finance, I sincerely doubt it is worth that. But it is not the financial value that I was looking at. It was the name that could be used to influence a global audience. I immediately mentioned this to a friend who works within one of the Federal authorities companies that should be interested in this to please take a look at this and try to convince his bosses that this is a gem that they should not miss. They looked at it but they passed. They did this because they were more interested in the financial side of the investment rather than the potential media window that they would command from it. In the end, a Hong Kong based company bought 80% of the company for USD 300 million. China won. We lost.

Now a potential giant in the oil service business is also up for grabs. It is a name that anyone connected to the oil industry will know that it is a standard bearer in the Middle East when it comes to must have names to work with. It is McDermott International. It is a public listed company that has a market value of below USD 800 million as I write this today. This is a very strange situation because this valuation is not reflective of a company that has a cash reserve of USD 700 million, a backlog of over USD 4.9 billion and an enterprise value of USD 1.4 billion after all debt. When you consider it compared to its peers, you can tell something is off here. However, this is not the point. I wrote this all to show what a gem it is financially. But in this case, it is also a gem in more than that. This is a company that one of the Gulf State’s official petroleum companies should own and immediately become a world player in the oil field supplier universe. This would be the equivalent of buying, in football terms, Messi because he is sick. You know his value when he will get better and unlike in the football scenario, the company will get better. Don’t be fooled by the oil price drop. This is but a temporary situation that will correct itself sooner than you think. I say this not because I can read the future. I say it because I can read people. And the people in the know want the price of oil to rise soon so it will.

If no governmental body wants to benefit from it, it surely must be a good enough opportunity for a private equity company to take it private. Clean it up and help it flourish. The reason it will flourish in that situation rather than being public is that the owners, the private equity company, will likely give it more time to focus on long term results rather than the short ones. In a business that is cyclical the way the oil business can be, having long term minded people mind the operation will reap gigantic results.

The point is that it is not everyday these opportunities pop up. We can search for years and nothing will show up. When they do, and they do, we must be ready to take full advantage of them even if they look shabby. Remember everyone wants the Van Gogh painting today. But how many wanted his works when he was alive? Those who understand the hidden gems are the ones who will reap the benefits of their knowledge.