This iconic automotive manufacturer has replaced key leadership, cooperated with investigators and continues to settle claims. New management has developed a reasonable plan to increase profit margins and reduce the company’s capital intensity while maintaining a steady new product cadence, and potential improvements in its governance could further boost shareholder value. The company's brands appear largely undamaged and business is growing. We believe this stock pick appears to be on the road to recovery.
Since the start of 2016, over a dozen energy companies have emerged from bankruptcy as public companies. Knowledgeable distressed investors have not been able to soak up this large supply of new post-bankruptcy stocks, leading to their stock prices being even softer than usual. We think many of these post-reorganization oil and gas stocks look like good bargains right now. This article highlights several post-Chapter 11 stocks that look particularly attractive, together with a few that narrowly escaped bankruptcy and now offer interesting turnaround potential.
Large-cap stocks not in the S&P500 Index do not directly participate in the upward cycle and may get left behind, creating good long-term bargains. Similarly, when the cycle reverses and investors bail out of index ETFs, stocks not in the index could decline less. With these thoughts in mind, we searched for “left-behinds”--large-cap stocks that are not members of the S&P500 Index that look attractively valued. Some look like stand-alone bargains, others look attractive relative to their peers that are in the S&P500 Index.
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.
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.
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
This Forbesarticle 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."