Turnaround Investing Blog

George Putnam, one of the country's leading turnaround and distressed investing professionals, shares his timely insight on the economy and turnaround investing opportunities.

Mutual Funds

Mutual Fund Turnaround Investing: This Year’s Crop

Excerpted from March 2013 Issue

In addition to advising against market timing, we always strongly recommend diversification as the best way for investors to reduce risk.  For that reason, we believe that mutual funds are very appropriate for many investors because they provide ready-made diversification.  However, given our contrarian bent, we don’t like just any mutual funds; rather we like funds that either focus on turnaround investing as part of their strategy (see the article in the October 2012 Turnaround Letter) or are themselves something of a turnaround.  This latter category usually means funds with good long-term track records that have stumbled for a year or two.

Last year around this time (see the March 2012 issue), we looked at nine funds that fit in this rebound category.  They had underperformed significantly in 2011 despite strong long-term records.  As a group, they definitely lived up to our expectation that they would turn around: the average return (net of fees) for the nine funds for 2012 was just shy of 20%, almost four percentage points better than the S&P 500.

The stock market was less volatile in 2012 than it was in 2011, but nonetheless a number of funds with good long-term records stumbled last year.  We’ve highlighted several of them below that we expect to revert to their winning ways before long.  Find out which mutual funds George Putnam recommends for prudent contrarian and value investing.

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Amazon = US GDP 1970

Amazon joined Apple in reaching a $1 trillion market capitalization. $1 trillion is about the same as the total value of New York City property and the total value of loans at JP Morgan, the nation’s largest bank in terms of assets. Jeff Bezos’ $160 billion stake would place him (personally) as the #33 largest company in the S&P 500 in terms of market cap, next to Coca-Cola, Disney and Netflix. We aren’t bold enough to predict whether the shares will continue upwards or if they are in a bubble reaching maximum inflation. Setting aside for a moment their investment prospects, let’s admire the truly remarkable milestone that these two companies have reached. Read More.

EV/EBITDA: What Is It & Why Are We Using It More?

In reading recent editions of The Turnaround Letter, you have probably noticed that we are increasingly using EV/EBITDA as a valuation measure, rather than the better-known price/earnings multiple.  We thought it might be useful to describe this measure and why we like it.

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."