Yes, I've been buying a lot of Extendicare (OTC:EXETF) in my Special Situations portfolio. The stock comprises well over 30% of the portfolio, but I'm back to add to the position. The recent dip in the stock price in the face of an imminent, value-unlocking catalyst is just silly.

The situation is the same as before. Extendicare is selling its American unit, and is actively involved in negotiations with a buyer. It's cleared up an investigation with the U.S. government that had prevented a sale before. The resolution consists of a $38 million penalty and ongoing compliance costs of $1.5 million to $3.5 million annually for five years. Most importantly, the American unit retains its ability to participate in government health care programs. In my article from early last month, you can read further details of the resolution.

But despite the imminence of a deal, the stock continues to languish as impatient investors hit the exits. And guess what? Even without a deal to sell the American unit, the company has committed to divest the business, with a spinoff as the most likely outcome. Any split of the business here will force the market to see the value in the American unit, which it is currently drastically underestimating.

For more on Extendicare, follow me on Twitter: @TMFRoyal. And check out my dedicated discussion board. If the stock continues to drop from here without some kind of fundamental change, I expect that I will continue to buy more.

Foolish takeaway
My Special Situations portfolio is buying more Extendicare, adding about $2,000 – or about 2% of the portfolio – to my position. The stock already comprises over 30% of my holdings, but the low downside and the potential for significant upside here looks just too attractive to pass up.