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There are certainly good opportunities in foreign turnarounds, but also very significant risks as well. The market inefficiencies that provide unusually high return potential for turnarounds here in the U.S. are probably even greater in foreign markets. However, there may be special, local features that affect foreign companies that we may not understand when we view them from afar. Also, if a foreign company is at risk of filing for bankruptcy, or its equivalent, that raises the risk and uncertainty to another level. The bankruptcy laws in foreign countries are very different from such laws in the U.S. In many countries, it is very difficult for a bankrupt company to reorganize, and so almost all bankruptcies result in the company being liquidated. The bottom line is that we would only recommend investing in a foreign turnaround if you are comfortable that you understand the local legal and market factors affecting the company.
(Question submitted by Reynaldo R.)