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The Turnaround Letter

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May 2012

Volume: 26
Edition: 11

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Turnaround stocks that could benefit from the Presidential election

A Likely Election Winner: Television and Radio Stations

May 01, 2012
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In what is sure to be a spirited battle for the White House, The Turnaround Letter looks to the most likely victor in this election year—political advertising. With one analyst predicting nearly $5 billion earmarked for this niche, George offers up nine broadcasters likely to profit from the heated Presidential campaigns.
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These bank stocks have strong turnaround investment opportunity.

Bank Stocks: Can't Get No Respect

May 01, 2012
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Despite significant headwinds, many bank stocks continue to trade below book value, and “Bank Stocks: Can’t Get no Respect” offers ten turnaround purchase opportunities from the under-appreciated financial sector.
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How will this Presidential election impact your wallet?

Whither this Election Year Market?

May 01, 2012
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The Turnaround Letter analyzes historic election cycle market data and offers its unique insight on the coming months. Read “Whither this Election Year Market” to see how the Obama-Romney battle could impact Wall Street—and your wallet.
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This homebuilder could rebound nicely with its seasoned executives and reduced operating expenses.

Purchase Recommendation - May 2012

May 01, 2012
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We feel the residential housing market is poised for rebound, and The Turnaround Letter looks to this promising building products small-cap for a number of reasons. Rather than putting all of its eggs in one basket, this company supplies many of the biggest players in some of the fastest-growing markets nationwide.
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News Notes & Updates - May 2012

May 01, 2012
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As a result of these significant corporate developments, The Turnaround Letter has several actionable updates for your investments.
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Turnaround Tips

Today's Tip: Warrants

TLCorner

Where Are the Customers' Yachts?

This headline could easily apply to Goldman Sachs today, as recently described by former employee Greg Smith. Actually, it is the title of a book written in 1940 by a former Wall Street employee named Fred Schwed, Jr. The title refers to a story about person admiring the yachts owned by bankers and brokers who asks where the customers' yachts were. Of course, the customers, who had dutifully followed the advice of the bankers and brokers, couldn’t afford yachts. This just goes to show that there is nothing new about the attitude that Goldman Sachs employees were purported (probably accurately) to have about their clients. It was just as true in 1940--and likely has been forever--as it is now.

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Beware of Trendy Turnaround Candidates - Even Green Ones

The stocks of a number of “green” companies have soared and then crashed and burned over the past year or two. This is particularly true in the solar energy field. For example, Energy Conversion Devices saw its stock climb above 80 in mid-2008. But the company’s results never justified the lofty valuation, and it ended up filing for bankruptcy on February 14 of this year. The stock has fallen to 0.16, and it is probably overpriced even at that level. Read More.

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.

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What did The Turnaround Letter see that others did not?

What did The Turnaround Letter see in these companies that others did not?

Questions & Tips

AskGeorge

Now that Greece's latest bailout is complete, is it safe to buy European stocks again?

We’re not at all sure that either Greece’s or Europe’s troubles are truly behind them.  But that said, we also believe that it makes sense to have some European exposure in your portfolio.  The advice we gave in the November 2011 issue still holds...

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With so much turmoil and uncertainty in the U.S. economy, and even more fear of collapse overseas, do you ever recommend just getting out of the stock market all together and hunkering down with something safer like bonds?

I never recommend getting out of the stock market entirely--or even making major changes to your allocation to stocks. The stock market is so unpredictable that if you bail out, the risk is very high that you will miss a significant upturn. Moreover, even if you make the right call to get out of the market, you then have to muster the courage to get back in. 

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What is your opinion on investing in foreign turnaround companies?

There are certainly good opportunities in foreign turnarounds, but also very significant risks as well. The market inefficiencies that provide unusually high return potential for turnarounds here in the U.S. are probably even greater in foreign markets. However, there may be special, local features that affect foreign companies that we may not understand when we view them from afar. 

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Bankruptcy Investing

George reflects on bankruptcy investing activity & trends seen in 2010. Read more.

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Motorola Notes Redeemed

Wendy's Facility, Tender Offer Completed

Residential Capital Chapter 11 Petition Filed

Schwab Monthly Activity Report Filed

Bristol-Myers FDA Approval Received

Purchase Recommendation - February 2012

Will the Euro survive?

With the resurgence of unrest in Europe, we are bringing back the poll question we first did last October: Do you think the Euro will survive as the common currency in Europe?
See Poll Results Poll Archive