Bankruptcy/Chapter 11 / Banks
/ Diversified Financials
R&G Financial Plan Confirmed
The U.S. Bankruptcy Court confirmed R&G Financial’s Third Amended Chapter 11 Plan of Liquidation. According to documents filed with the Court, “The Debtor’s Plan contemplates an orderly liquidation of its remaining assets and ratable distribution of such remaining assets among its creditors. Substantially all of the Debtor’s parties in interest have reviewed, commented upon, and shaped the structure and design of the Plan. The Debtor submits that an orderly liquidation of its estate is in the best interests of all of its creditors.…” This banking services provider filed for Chapter 11 protection on May 14, 2010, listing total assets of $7.3 billion on its most recent pre-petition annual report filed with the SEC. The Company’s Chapter 11 petition indicated total assets of just $40.2 million. The asset discrepancy is the result of the April 30, 2010 Office of the Commissioner of Financial Institutions’ closure of R-G Premier Bank of Puerto Rico and subsequent appointment of the FDIC as receiver for the Bank.
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Turnaround Investing Blog
The market believes GameStop (GME) is headed toward a relatively quick demise; however, new CEO Mike Mauler's retrenching to bolster its core business is a good strategy. At 2x EBITDA, the lowest multiple in the market for any stock above an $800 million market cap, the shares can do well if the company can slow the decline or if the company is acquired. We don't see a liquidation or transformative acquisition as likely. For highly-risk-tolerant investors, the shares' extreme discount offers the potential for outsized returns.
Harnessing Activists to Help Find Turnaround Stocks
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While one of the many dozens of activist funds might find their way to selecting your particular stock, this approach is likely to be frustrating and unrewarding. A better approach is to buy after the activist makes their move. Once an activist takes a stake in a company, how do you evaluate whether it is worthwhile to follow on? Admittedly, this is a bit of an art... Learn how you can harness the power of activist investors to find market-beating turnaround stocks.
Turnaround Letter Stock Pick Named Top Performer of 2017
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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."
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