OK - let's go over ARMH....pretty easy one IMO and can be a good one to learn from.
So - it fits our bloated pig criteria of mrkt cap over $10 bil and selling for more than 10 X's sales. We take a look at it, and on FA it is not doing too badly, a fairly well run company. But it is a fairly mature company and has gotten extremely overpriced. Not only is p/s out of line, but many other indicators as well - p/e, p/cf, p/b are all out of line with the industry. So basically this one is doing well, just way over priced. So we give it a nomination to the bloated pig watch list. Next, we just need to time our entries, which is not always the easiest of tasks, but just take a look at a chart from 2009 to today. We see a very nice run over 2009 and 2010, but then notice how much larger weekly and monthly candles get at the start of 2011? Sure sign for this type of play - and time to let the home run(s) come to us. At times when we see mrkt as a whole looking to turn south, and/or our chart on ARMH is saying time to go down, we hit it. Not every time will be successful of course, but just look at how many times a home run playing the down side has occurred since 2011 - 6 of 'em and all fairly easy reads. Now these weren't the most giant home runs for sure, but still big time winners. Also notice how it has been recovering from these, trying and trying to come back near the highs - but failing - setting up for the next go around - very common for a good company that is just out of wack.
Not all bloated pigs are the same of course, but for one that is fairly well run and just over priced, this is a classic and pretty easy to hit over and over - we still have some more to go on it as well :)
