About a month ago, Zac Bissonnette highlighted an insightful Financial Times article by Mark Sellers, a well-known value investor. According to the article, Sellers focuses on two types of investments:

• Companies with economic moats/tangible asset values exceeding current market price (asset plays)
• "Optionality" investments

Throughout the article (which is free to read), Sellers highlighted a very interesting stock, Carrizo Oil and Gas (NASDAQ: CRZO). Rather than quoting Sellers, I'll remind you that you can read the article here. However, I would like to show you the stock's chart, which appears very interesting to me. As you can see, since featuring the stock in his article, it has fallen more than $5 per share.

While this certainly isn't a huge sell-off, I think it has created a very interesting buying opportunity for people who like Carrizo as a long term investment for a couple reasons. First and foremost, the stock is currently sitting right around a support level. In addition, the stock is very oversold here according to the stochastics, leading me to believe the support will hold. While hardcore value investors will argue that the buying price doesn't matter as long as the intrinsic value is significantly higher -- a concept I don't necessarily agree with -- I believe it always makes sense to buy stocks at logical and opportune times.

With the tremendous "free options" which aren't being priced into the stock, as Sellers outlined, and an attractive buying opportunity according to the chart, I think Carrizo is very interesting here.

On a sidenote, both Zac Bissonnette and I are big fans of Adams Golf (OTC BB: ADGO) -- a stock which we think holds a great "free option" potential. Basically, the stock's net current asset value covers much of the current market capitalization and, as a result, we believe the market is underestimating the future of the company's hybrid irons -- a product receiving solid reviews and visibility. For a more extensive take on this stock, please see Zac's post.

Disclosure: Kevin Kelly and Zac Bissonnette are long Adams Golf.

Hedge fund manager Mark Sellers can be relied on to provide valuable insight into investing each week in his column for the Financial Times. In this weekend's newspaper, he writes about "optionality" and the market's frequent failure to assign the proper value to companies at crossroads. As Sellers writes, "When I use the term "optionality", I'm referring to a situation where binary outcomes are possible and it's difficult to determine the likelihood of either scenario occurring. When it's difficult to determine something, the market will sometimes take the lazy route and just ignore it. That's where the inefficiency comes in. Bill Miller has said the market won't pay for optionality. In my experience, this is often true."

He goes on to discuss his firm's investment in Carrizio Oil and Gas (NASDAQ: CRZO), and investors may do well to do a little research into that situation.

But the larger point of Sellers's column is important: The best, can't-lose opportunities in investing often involve companies experiencing a great deal of uncertainty. The key for investors is finding opportunities where the worst case scenario won't result in a large decline in value.

Monish Pabrai refers to this as "Heads I win, tails I don't lose much" and argues that a focus on finding these situations has led to the success of the world's most successful investors and businesspeople including Warren Buffett and Richard Branson.

Pick up a copy of his book The Dhandho Investor.

Investment manager Mark Sellers recently wrote in a piece for the Financial Times that his firm researches two kinds of companies:

1. Those with wide economic moats. These are companies who have competitive advantages that are practically unassailable. The best example is a company with a strong consumer brand. As Warren Buffett said about Coca Cola (NYSE: KO): "If you gave me $100 billion and said take away the soft drink leadership of Coca-Cola in the world, I'd give it back to you and say it can't be done."
   
2. Companies with hidden assets trading below the value of those assets. Companies with huge real estate assets that are understated on the balance sheet would fall into this category.

What's interesting is that these are basically the two kinds of stocks with which Warren Buffett built his fortune. Early in his career, with the Buffett Investment Partnership, he focused on the latter, inspired by the work of Benjamin Graham, the father of value investing. Later in his career, inspired by the writings of Phil Fisher, he started to look for companies with moats.

So when you're looking at potential investments, look for stocks that one of those two things going for them: Hidden assets or a very wide moat. Otherwise, they may not be worth bothering with.