Roust (f/k/a Central European Distribution Corporation and CEDC) and two affiliated Debtors filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Southern District of New York, lead case number 16-23786.
While we believe that overall bankruptcy activity will remain at a high level for the foreseeable future, we think that filings in the energy sector may have peaked. We are optimistic that the increasing bankruptcy activity will provide some very attractive opportunities for turnaround investors.
Adding a sizable debt burden on top of the profit uncertainty will further expand the range of possible outcomes; and this very wide range creates inefficient pricing, as investors can have very different views on what these bonds are actually worth. For the buyer of distressed bonds, this uncertainty and inefficiency are powerful sources of potentially high returns.
With U.S. stocks well into their eighth year of a bull market and the economy showing increasing signs of strength, finding ideal turnaround stocks--those with all three ingredients--can be a needle-in-the-haystack project at best. What is an investor to do in a seemingly barren value stock landscape?
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:
* Bristow remains in our active portfolio (currently as a Hold), and 2,849% gain is as of 1/17/17.
Darren Fonda notes, "…besieged stocks often start to recuperate as the headlines fade and investors anticipate a return to precrisis sales and profits. The trick, of course, is to find companies that are more likely to rebound from a setback than collapse entirely."