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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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George Putnam's Favorite Stocks for 2016

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2015 Bankruptcy Recap: 46% Increase Fueled by Oil & Gas/Mining Industry--Further Uptick Predicted

Looking back at 2015, research reveals a 14% decline in overall business bankruptcies but a 46% uptick in public company Chapter 11 filings—with a striking 51% of those filings coming from the battered Oil & Gas/Mining sectors. Economic indicators point to further increases in corporate bankruptcy, in general, and Energy-related filings, in particular. Just a few days into 2016, this viewpoint has already been validated by Arch Coal's long-awaited $8 billion Chapter 11 filing—and continuing oil price plummets severe enough that OPEC will likely convene an emergency meeting to address "shattered" economies. Read More.

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Spotlight: Junk Bond Market

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MarketWatch's Mark Hulbert recently tapped George's distressed investing expertise to determine the fate of the junk-bond market and what its nearly three-year decline likely means for your portfolio.

 

Hulbert writes, "What’s really going on? For insight, I turned to George Putnam, an expert in distressed-company investing. His Turnaround Letter advisory service has handily beaten the stock market over the past 15 years, according to the Hulbert Financial Digest’s tracking, by an impressive margin of 7.3 percentage points a year on an annualized basis."

 

Commenting on the rapid growth of high-yield exchange traded funds (ETF's), Putnam notes, "They have become the investment vehicle of choice for short-term investors….Those investors tend to be trend followers and, therefore, are just the opposite of being contrarian."

 

Read the full MarketWatch junk-bond article to find out what George thinks these recent indicators likely mean for future distressed investing profit.