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.

Sell When They Want to Buy; Buy When They Want to Sell

Excerpted from November 2013 Issue

Turnaround Letter Associate Editor Randy Roeing recently made an interesting observation. He noticed that through October of this year we had already made more stock sale recommendations (16) than in any of the previous five full years. In fact, we have made at least twice as many sale recommendations so far this year as we made in each of the years 2008, 2009 and 2010.

There are at least a couple of good reasons for this increase in sale recommendations. First of all, it is always easier to sell a stock when it is going up. That means there are more people who want to buy your stock, and so you can get a better price. We occasionally quote Baron Rothschild who reportedly said in the early 19thcentury, “The time to buy is when blood is flowing in the streets” (in other words, when everyone else is panicking and selling). Nobody recorded what the Baron had to say about selling, but we’re guessing he would have said something like, “The time to sell is when things look rosy and everyone wants to buy.”

Secondly, it never pays to be greedy. There is an old Wall Street saying, “Bulls make money; bears make money but pigs get slaughtered.”  What this means is that investors who consistently pursue a bullish (optimistic) long-term stock strategy can make money, as can investors who consistently apply a bearish (pessimistic) strategy. The investors who suffer poor investing performance—i.e., “get slaughtered”—are those who are greedy and who always chase the hot stocks or hold onto stocks too long.

You will almost never be able to sell a stock at exactly the right time—just as it peaks and starts to go down. If you try to do that…Read the full subscriber-restricted article on market timing.

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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

 

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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."