Calamos Asset Management, Inc. (CLMS)

The asset management business is one of the best around. It enjoys significant economies of scale and repeat fee income. This is a wager that once the economy emerges, asset managers will benefit.

Calamos Asset Management has recently been underperforming the market and I believe it is due for a price spike. the current price of $11 is $3 above book value. Unlike most companies, the book value of Calamos consists almost entirely of cash and investments that are not necessary to the company's core business, which is investment advisory services for mutual funds and other clients. The substantial liquid assets provide significant downside price protection. The upside is substantial. Calamos typically trades for 3 times book value. Another important point is that Calamos is a very high quality asset manager. The performance of Calamos funds has been outstanding over the last ten years. I am encouraed by the fact that many of the largest money management companies are significant investors in Calamos. On the downside, Calamos missed its recent earnings estimates and its Stockscouter rating is a lowly 4.