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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.

Bonds / Post-Bankruptcy Stocks

Mid-Year Bankruptcy Investing Update

Excerpted from the July 2012 Issue

Bankruptcy filings by publicly traded companies in 2012 are running at roughly the same pace as last year – 31 filings so far this year versus 37 at the same time last year. This year’s corporate bankruptcies are somewhat larger (both including and excluding financial companies) than the filings during last year’s first half, but in 2011 we saw a number of big companies go into Chapter 11 late in the year.

We are seeing a few more financial companies file for bankruptcy this year than last, but nowhere near the number that we saw from 2007 through 2010. There are also three aviation related companies (Hawker, Pinnacle and Global) on the list of largest bankruptcies of 2012. Otherwise, there are no obvious trends in the types of public companies going bankrupt.

Until we get a few more big Chapter 11 filings, we don’t see much in the way of great bankruptcy investing opportunities. The bonds of AMR (the parent company of American Airlines, which filed for Chapter 11 last November) could have further gain potential, but they have already run up quite a long way.  Kodak is probably the next most prominent Chapter 11 case, but the value of Kodak bonds will depend almost entirely on the value of the company’s patents, which is very hard to determine. We recommend that investors be patient because we expect better opportunities down the road.

For our thoughts on why we may see more bankruptcy filings in the not-too-distant future, as well as our 2012 bankruptcy statistics, see the full article in the July 2012 Turnaround Letter.

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Distressed Investing: Exploring "The Dark Side"...What To Do When Recovery Unravels

Investing in distressed companies can produce enormous gains: When the recovery is successful, it is not uncommon for the stock to produce multiples of the initial investment and for bonds to generate 50-100% gains along with often-generous interest income. However, not all distressed companies recover, and some decay into bankruptcy. What happens to your investment then? 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.