Excerpted from the November 2016 Issue
A common temptation is to mix emotions with investing. Your candidate won, and so you are more optimistic--or your candidate lost, and now you’re more pessimistic. Stocks don’t know who you voted for. Avoiding emotionally-driven post-election buying and selling will be beneficial to your financial health.Read More
As tempting as it may seem, buying the stock of a company operating under bankruptcy court protection is almost never a good investment.Read More
Leadership matters. Whether in sports or in business, an organization is not just a collection of people, cash, physical property, intellectual property and other assets. Not every new management team is highly capable and new leadership cannot always overcome dire strategic situations or the quagmire of a decaying industry; but without good leadership, no business can prosper for long--much less survive.Read More
There is an old saying among turnaround investors: “earnings and assets come and go, but debt is forever.”Read More
While important to any investment program, diversification is critical to successful turnaround investing. Read More
Excerpted from the October 2016 Issue
While everyone expects the stock market to drop in response to a rate hike, in the past the opposite has often happened. Interest rate rises are usually in response to strength in the economy, which is generally good for stocks. The effect on bonds is much more clear-cut: when rates go up bond prices go down.Read More
In turnaround investing, the story will often “improve slowly at first, then all of a sudden.” Few things in investing are as frustrating as making a good call but selling the stock just before it takes off.Read More
There is no easy way to determine how much patience is appropriate; but if your turnaround is well into its fourth year without meaningful progress, it could be time to move on.Read More
Excerpted from the September 2016 Issue
A good place to start is in the company’s filings with the SEC--in which Non-GAAP earnings must be reconciled with GAAP results. Earnings conference call transcripts, available for free for most companies, can reveal management’s reasoning. Investors will also want to look at history--how often and how large have adjustments been over the past five years? To be most effective, the investor can use both GAAP and Non-GAAP numbers. Minding the GAAP gap can help improve the chances that your stock profits become recurring.Read More
Turnaround investors recognize the opportunity in a battered stock well before the rest of the market and want to pounce immediately. But even if the fundamentals look attractive and there is a margin of safety in the valuation, the stock can still decline--sometimes substantially.Read More
Learn & Avoid These 10 Common Mistakes
Turnaround Investing Blog
Watch to see if ADP’s CEO Carlos Rodriguez inadvertently helps Pershing, and his aggressive and sometimes personal stance against Ackman could backfire. Overall, because of the stock’s strong returns and Ackman’s weak credibility, we would give this activist campaign a low chance of making ADP a successful turnaround investment. For turnaround investors, the Trian campaign appears to have a win-win opportunity for investors--either Peltz joins the board and learns enough to re-invigorate P&G, or loses and management must either execute (boosting earnings and the shares) or they will face a more drastic proxy campaign with higher odds of success down the road. We think the P&G campaign could turn out well for shareholders.
Warrants: A Solid Investment Opportunity
Warrants provide a valuable tool for the savvy investor. When selected and implemented well, they can be a smart addition to a diversified investor’s portfolio. Like options, warrants are not equity. They only convey the right to buy equity. As such, neither holder is entitled to dividend rights, pre-emptive rights, proxy voting or any share of any liquidation.
Warrants' return potential can be very high, but they also carry significant risks. Learn what they are, how they work, strategies to minimize risk and find profit with warrants.
Here's Why You Should Invest in Asset Managers
This Forbes article cites a recent MoneyShow write-up that recommends investors take advantage of the strong stock market and potential interest rate hike by "putting some of your investment assets into the shares of asset management stocks."
The article praises The Turnaround Letter's OAK purchase recommendation and quotes George Putnam: "As the corporate debt binge that we’ve experienced since 2009 comes to an end, Oaktree will benefit from a growing number of restructurings and bankruptcies."
Learn more about Putnam's investing success with turnaround stocks.
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