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.

Exchange Traded Funds (ETFs)

George Putnam's Strategy to Beat Passive Investing Trend

MarketWatchhas some advice for investors: "Own out-of-favor stocks held by active funds when they start beating indices again." Pointing out the difficulties currently faced by fund managers, the article cites George's observation that this "dynamic sets up a clever way to place a contrarian bet against the ETF boom." Brush cites three of George's recent stock picks and touts The Turnaround Letter's straightforward investing approach.  

A few of key points from the write-up are summarized below:

  • The author, Michael Brush, describes how the heavy inflows into index-tracking ETFs create a self-fulfilling prophecy that makes active managers’ underperformance worse. Brush cites The Turnaround Letter for a clever strategy to place a contrarian bet against the powerful ETF trend.
  • Putnam suggests investors buy stocks that are not in the major indices, that are “left behind.” These stocks may carry lower valuations.
     
  • If the ETF rush fades, these “left behind” stocks might perform particularly well, especially if heavy ETF selling pushes down stocks that are in the major indices.
     
  • MarketWatch cites three of the five “left behind” stocks that I highlighted in the May edition of The Turnaround Letter: Blackstone (BX), Las Vegas Sands (LVS) and Norwegian Cruise Lines (NCLH).
     
  • The article continues with three reasons cited by Jeffrey Gundlach (head of DoubleLine Capital) at the 22nd Annual Sohn Investment Conference that active managers should start outperforming ETFs.

You can access the the full article here—it is an interesting read! 

*MarketWatch, published by Dow Jones & Company, tracks the pulse of markets for engaged investors with more than 16 million visitors per month. 

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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.