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.

Exchange Traded Funds (ETFs) / High Yield Bonds

Mid-Year Stock Market Review: Is Recent Volatility a Blip or Trend?

Excerpted from July 2013 Issue

We don’t put much faith in market forecasts, even our own.  But the forecasts that we made at the beginning of the year look pretty good right now.  In the January issue we said “We remain quite optimistic about the stock market for 2013,” and as we write this, the S&P 500 index is up about 13% for the year to date.  We also said, “We remain wary of high yield bonds,” and we expanded on our concerns in the February issue.  So far this year, the high yield market has been fairly weak.  One of the largest high yield bond ETFs, the SPDR High Yield Bond ETF (symbol JNK) is down about 2.5% in price, and with dividends it is about flat for the year.

It is also worth noting that our “year-end bounce” picks that we made in our December investment newsletter have done particularly well this year.  Eight of the ten year-end bounce candidates that we identified are up so far this year, and the group is up an average of 33% year-to-date, well outpacing the broader market.

But that’s enough of patting ourselves on the back for some good calls at the beginning of the year.  Let’s turn to what we expect for the second half of 2013. While most of the last six months have been relatively placid and profitable for investors, the past couple of weeks have been quite different.  When Fed Chairman Ben Bernanke mentioned in mid-month that the Fed was likely to begin cutting back its bond purchasing program later this year, that spooked both the stock and bond markets.  In the week and a half since Bernanke’s speech, the stock market has become very volatile with the Dow Jones Industrial Average moving by more than 100 points every day except one.  While the volatility has gone in both directions, the market is still down about 2.7 percent since the speech.  The bond market has been hit even harder.  We wouldn’t be surprised to see some of this volatility...

Read Putnam's full stock market forecast---and related "Mid-Year Bankruptcy Update."

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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

 

stock market advicex

 

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."