Cheap is not the same as a bargain.
A pair of trousers might be cheap, but if they're such poor quality that you can only wear them twice then it's certainly not great value.
The same goes for ASX shares.
With the S&P/ASX 200 Index (ASX: XJO) down more than 12% year to date, and with mining stocks holding that average up, there are plenty of stocks that are dirt cheap right now.
But only some of them are a bargain. Even in the long run, they won't all see a resurrection in their share price.
So when a professional stock picker reveals that he recently bought a specific ASX 200 stock due to a heavy discount, it's worth taking notice.
The ASX 200 share that discounted 20% last month
Arena REIT No 1 (ASX: ARF) shares, like most ASX shares involved in real estate, have struggled mightily in 2022.
Rising interest rates always mean reduced demand for property, which has a flow-on effect to real estate investment trusts.
Not only has the Arena REIT share price plunged more than 30% year to date, but just in the month of September, it lost a hair-raising 20.7%.
Glenmore Asset Management portfolio manager Robert Gregory said in a memo to his clients that the bond market had a big impact.
"The sharp increase in bond yields was the main driver behind the decline, which impacts property trusts like Arena REIT by increasing the discount rate used to value properties."
But the rapid decline in share price has merely brought Arena back to its net tangible asset (NTA) value of $3.37. The September carnage ended at $3.33, and the stock closed Friday at $3.44.
So Gregory and the Glenmore team have bought more shares.
"Whilst it is reasonable to assume there will be some form of downward revaluation due to higher interest rates, in our view the material stock price fall has created an excellent buying opportunity for medium-term investors, hence we added to our position."
Gregory also pointed out that Arena has an advantage during times of high inflation.
"Arena REIT does have a large proportion of its properties with rents linked to CPI increases, hence the current high levels of inflation do assist rental revenues."
Despite Gregory's outlook, his peers aren't quite as sure about Arena.
According to CMC Markets, five out of nine analysts rate the ASX 200 share as a hold. The other four are urging their clients to sell.
