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Bankruptcy Update

 

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Bankruptcy Update

Bankruptcy filings in 2012 looked a lot like 2011. The total number of public companies filing for Chapter 11 through December 21, 2012 was just a hair below the total for 2011, and there will probably be a few more filings by year end. The total assets going into Chapter 11 in 2012 fell somewhat below the 2011 totals, both including and excluding financial companies. (We usually exclude financial companies from the asset totals because they always show very large asset numbers on their balance sheets, which skews the asset totals in certain years. For example, in 2008 the total asset figure reported by just one financial company, Lehman, was more than ten times the total assets for all 125 non-financial bankruptcies that year.)

The biggest bankruptcy filers of 2012 come from a wide variety of industries. There were several large financial companies entering Chapter 11 once again this past year as that sector is still sorting itself out after its upheavals in 2008. The only other common theme among the largest bankruptcies in 2012 was energy.  Four of the ten largest Chapter 11 filings this year were related to energy in some way: Edison Mission (power generation), Overseas Shipholding (petroleum shipping), Patriot Coal (coal production) and ATP Oil & Gas (oil and gas production). The low price of natural gas, mentioned in the first article, probably played at least some role in all four of these filings.

We expect an increase in large bankruptcy filings in 2013. Read the full, subscriber-restricted article to find out why--and to determine if there are bankruptcy investing opportunities to be found in the current crop of bankruptcies.

 

 

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Turnaround Investing Blog

IBM: Not Yet Time to Swing at this Pitch

IBM’s stock underperformance since IBM’s current CEO took the helm in 2012 has been stark, with the shares declining 23% while the S&P500 Index has more than doubled. One big problem: revenue growth rate is zero, at best. Without revenue growth, what’s left to entice investors? The real driver of value at IBM – free cash flow that is used to repurchase shares. Can IBM borrow its way to shareholder prosperity as its cash flows shrink? What to do with IBM shares? Wait for a better pitch in the form of a catalyst or much lower valuation. Read More.

Comparing Stocks Vs. Bonds

While the common stock of a turnaround candidate usually has the greatest upside potential, other classes of securities, such as bonds or preferred stock, may offer attractive profit possibilities with less risk. Many turnaround companies have only one class of securities available to investors but where there are different classes to choose from, it can pay to do a little extra analysis of the various options.

Read More.

Turnaround Letter Stock Pick Named Top Performer of 2017

 

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What Last Year's Top Stock Pickers Are Buying in 2018

 

This Forbes write-up follows up on the recent Top Stock Tips report--naming The Turnaround Letter's Crocs recommendation the top performer of 2017: With 90% gains, CROX beat out 100 other investment ideas included in the report; and the stock continues to have value investing appeal, according to Putnam.

 

George notes, "We see additional upside for the stock in 2018 as management's efforts continue to bear fruit, though the gains will likely be more muted than we saw in 2017."