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George Putnam, one of the country's leading turnaround and distressed investing professionals, shares his timely insight on the economy and turnaround investing opportunities.

Post-Bankruptcy Stocks / Software & Services

Kodak Emerges from Bankruptcy; Great Brand Recognition, but….

September 8, 2013
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Eastman Kodak recently emerged from its 19-month Chapter 11 proceedings, but the former photography icon is a mere shadow of its former self. The reorganized company will focus on the commercial printing business. Annual revenues are expected to be about $2.7 billion, down from $14 billion a few years ago.

Clearly, Kodak is still a highly recognizable brand, although most of its recognition came through photography which it is no longer a significant part of its business plan. While we like to see good brand recognition in a distressed investment situation, that by itself is not enough to make the company a good investment.

Kodak needs to prove itself all over again after coming out of bankruptcy. Prior to the Chapter 11 filing, management did not appear to have a good understanding of the company’s business prospects, and it remains to be seen if they will do any better going forward. We recommend waiting at least several quarters to see how management executes its new business plan before considering an investment in the reorganized Kodak stock.

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Watch Headlines for Turnaround Stock Opportunities

Negative media headlines can be a great source of turnaround ideas. Stories about struggling companies, management turmoil, failed strategies, large financial losses, industrial accidents, lawsuits and the like can drive a stock to well-below reasonable levels and may provide a buying opportunity. Like all Wall Street axioms, however, “buy on bad news” must be accompanied by careful analysis to evaluate the potential for turnaround success. Read More.

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Banking on a Financial Sector Turnaround

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MoneyShow.com recently tapped George's favorable opinion for a banking industry rebound. In "Turnaround Expert's Banking Bets," Steve Halpern highlights a trio of Putnam's top stock picks from the battered financial sector.

 

George reminds value investors: "Fortunately, many of the factors...just aren't present in the market, and the other reason that investors seem to be down on the banks is they sort of expected the Fed to raise interest rates a little faster than they have. And the banks do better when interest rates are rising because they have wider margins on their loans, but I think the Fed will gradually raise rates to we will see profits improve, and so I think this downturn is really temporary."

 

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