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.

Will Amazon Take Over the World? Not Quite.

Excerpted from the July 2017 Issue

It seems that Amazon Fever is reaching new heights. With Amazon’s recent agreement to acquire grocery retailer Whole Foods, the market can’t entirely be faulted for assuming that their ever-growing reach and apparent lack of concern about profits will ultimately take over the economy. And typically, when Amazon enters a new line of business, many of the stocks in that sector fall.

Our informal search on amazon.com returned some fascinating and unexpected products for sale: a $31,861.88 (plus $3.09 shipping) Telescoping Maintenance Lift weighing 1,420 pounds; a $237,250 Lamborghini Huracan (the real thing); a $270,834.42 (used) Cisco Services Module and a Mahatma shipping drone that carries 22 pounds of cargo over six miles selling for $40,000. Could Amazon get into travel services? Or home building? What about chemical production? It’s hard to say; but back in 1997 when Amazon had its IPO as an online bookseller, who would have thought that it would reach half a trillion dollars in market capitalization and begin setting up an air traffic control network in Paris for its incipient global drone fleet?

Amazon certainly is impressive. Realistically though, not every industry will be challenged by their profit-draining expansion, nor will every product be sold at large discounts on amazon.com. In our July Turnaround Letter, we explore a brief selection of companies that would probably be among the last ones to succumb to Amazon Fever. Each has traits that are well outside of the Amazon model, are out of favor and have some interesting turnaround aspects. 

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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.