Small Cap

Under $1 Billion


FairPoint: New Parent Consolidated Communications Reports 2Q17

Telecom services company FairPoint Communications (Nasdaq: FRP) completed their merger with Consolidated Communications on July 3. On August 3, Consolidated reported their 2Q17 results. We like the prospects for the newly combined company and are making Consolidated (Nasdaq: CNSL) a BUY up to 22.
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TriMas Reports Improved 2Q17 Results

Industrial conglomerate TriMas (Nasdaq: TRS) reports that 2Q17 earnings increased by 16% from a year ago, and repaid about $60 million of debt. The turnaround story remains on track.
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Like any contrarian stock, this month's purchase recommendation is not without risks.

Purchase Recommendation - August 2017

We believe the stock market has missed several critical parts of this value stock's story. Plus, its cash flow is healthy and debt is only $395 million, about 1.2x EBITDA, and is partly offset by the $90 million in cash. The small-cap also holds a surplus real estate portfolio worth perhaps $80 million.
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Time to lock in stock profit.

Sale Recommendation - July 2017

This stock’s results have improved to the point where its stock valuation is now comparable to its peers.
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While this value stock offers considerable upside potential, it also carries significant risk.

Purchase Recommendation - July 2017

This small-cap stock pick disappointed investors almost from its first day as a public company, yet the Company has a lot of contrarian investing appeal: First, the accumulation of black marks has completely soured investors, leaving its shares trading at only 6.4x current year EBITDA. Further, its balance sheet and positive cash flow give the Company plenty of time for the fundamentals to rebound. Moreover, the Company continues to aggressively improve its cash flows in the face of its 62% revenue decline since 2014 and its positive free cash flow appears to be sustainable. With its considerable financial and operating leverage, this value stock is well-positioned to benefit from several opportunities.
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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.