Turnaround Investing Blog

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

Large Cap / Transportation

Don't Chase the Headlines

The recent unfortunate accident involving the Costa Concordia cruise ship, which is owned by a subsidiary of Carnival Corp., raises an important investing question: Should you bail out of a stock if the company is affected by a serious negative event? Unless the event could be part of a series or trend, the answer is usually “no,” for two reasons.

The first reason is that, unless you are a professional investor with a serious trading platform, you won’t be able to get out early enough to protect yourself. By the time you hear the news and place a sell order, all of the professional stock jockeys with hair triggers will have already driven the stock price down—which leads to the second reason.

The second reason is that the market usually over-reacts to bad news. For example, Carnival’s stock lost $4.7 billion in value immediately after the Costa Concordia accident. It seems highly unlikely that the accident will cost the company anywhere near that much. The ship was reportedly worth about $500 million, and it is almost certainly fully insured. Sure, there will be lawsuits, but the damages will likely be in the hundreds of millions, not billions—and they are probably covered by insurance too. While some number of potential cruise-goers will now choose some other type of vacation, Carnival is not likely to lose $4.7 billion worth of future business. In fact, we think the market’s over-reaction makes Carnival’s stock look like a good buy now.

Read More Distressed Investing Blog Entries

Learn & Avoid These 10 Common Mistakes

Free Report: Turnaround Investing Mistakes

Turnaround Investing Blog

Turnaround Investing Blog

A Closer Look At Two Activist Campaigns

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.  Read More.

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.

 

Value Investing

 

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

 

stock market advicex

 

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.