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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.

Bankruptcy/Chapter 11 / Post-Bankruptcy Stocks

Good Brands are Not Enough

One of the things we like to see in a potential turnaround stock is a strong brand name. That will often provide the foundation on which the company can build its turnaround.

However, the recent Chapter 11 filing by Hostess Brands and Eastman Kodak are reminders that well known brand names alone may not be enough to save a company. In both of these cases the brand names are widely recognized, but the products with which they are associated no longer represent strong business franchises.

The Hostess “Twinkie” brand is probably one of the most widely recognized names in the snack food industry—at least to those of us of a certain age. And Hostess Cupcakes, Snowballs and Wonder Bread are probably not far behind. But in this health conscious era, most of Hostess’ brands evoke thoughts of fat, calories, sugar and lack of fiber. Add this to labor and debt issues at Hostess, and it does not make a good recipe for a turnaround.

Similarly, the Kodak brand remains number one or two (battling it out with Fuji) in the photographic film business. But unfortunately, in this digital era nobody uses film any more.  Eastman Kodak undoubtedly has patents with some value, but they may not have enough value for the company to successfully reorganize in Chapter 11.

We still like to see a stable of good brands when we evaluate turnaround candidates, but the brands have to represent currently viable products. They must offer management a tool with which to reinvigorate the business. Unfortunately, as we’ve seen with Hostess and Kodak, that is not always the case.

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Puerto Rico Government Bankruptcy: Uncertainty But Also Investing Opportunity

Because of special tax law provisions that exempt the territory’s debt from not only federal taxes but also state taxes in every state, the bonds are widely held by investors across the country. Since the legal action is under a new law that has never been tested, there is tremendous uncertainty about how much creditors will recover and how long the process will take, but there may be opportunities for stock investors to profit from the island’s restructuring as well--perhaps with less downside risk than in many of the bonds. We found four public companies based in Puerto Rico that could benefit from stabilization in the island’s finances as well as three major insurance companies with exposure to Puerto Rican debt. Read More.

Market-Beating Profit: The 200+ Club

Turnaround stocks present a unique opportunity for savvy investors to buy in at bargain prices. Take a look at this list of just a few of our purchase recommendations that have realized a return rate of 200% or better:

Value Investing Stock Profit

* Bristow remains in our active portfolio (currently as a Hold), and 2,320% gain is as of 4/11/17.

Five Struggling Stocks That Will Turn Around

 

stock market advicex

 

Kiplinger points out that despite the post-election stock market surge, not all stocks have benefited from the uptick: "More than 100 issues in the S&P 500 have fallen in price this year, including dozens that have slumped by more than 10%....Yet these stocks won’t all stay in the dumps forever. Some will mount a comeback in 2017, making it an opportune time to try to identify the best candidates."

 

Quoting George Putnam, Kiplinger details five value opportunities for the new year.

 

Learn more about Putnam's investing success with turnaround stocks.