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.

Stock Advice is Only as Reliable as the Person Giving It

There are a lot of newsletter publishers out there, many of which espouse financial strategies, market forecasts and stock advice as diverse as the writers themselves. Some of publications will make a brief appearance—even occasionally quickly rising to fame with a few stock picks…only to plummet back to earth before that metaphorical ink is even dry. Like any decision that involves your hard-earned money, I advise a cautious, well-researched approach to the stock market. It’s true: Stock advice—both good and bad—is readily available, often for absolutely free; but trustworthy and time-tested investment guidance is a valuable and equally elusive commodity.

That’s why MSN Money’s Michael Brush labeled stock newsletter writers “the unsung heroes of investing,” explaining that although these writers may not be “…as glamorous as high-profile hedge fund managers who jet around in private planes…[they] deliver results, and that’s what matters….” Long-time Turnaround Letter readers already know that I don’t aim for rock-star excitement in my newsletter. I’ve always embraced a markedly long-term investing approach and my performance returns more than compensate for any apparent lack of charisma. As a contrarian investor, I certainly don’t follow the crowd.

In “Why Following the Winners Is for Losers,” Mark Hulbert explores this very subject and shares his investing insight with Wall Street Journal and MarketWatch readers—cautioning that ‘[f]ollowing last year’s stock market leaders is a risky bet.” When picking an adviser, Hulbert advises a focus on longer-term performance: “That is because, when picking an adviser based on his track record, you implicitly are betting that the future will be just like the period over which that record was produced.” Rather than rushing to buy into short-term profit, which could be propelled by risky strategies, Hulbert recommends—as do I—that investors focus on long-term performance. That’s why I always make our short and long-term return rates readily available. Incidentally, we’ve outperformed both the S&P 500 and more broadly-based Wilshire 5000 in the 1, 3, 5, 10, 15 and 20-year categories.

Hulbert Financial Digest, which tracks the returns of more than 200 investment newsletters, recently recognized The Turnaround Letter for its first place ranking for 15-year returns: Our average annualized return during this period was 14.2%, versus the S&P 500’s 4.7% annualized (assuming dividends were reinvested). Hulbert notes, “While there is no magical track-record length on which you should always focus, 15 years is a good rule of thumb. The past 15 years—from the beginning of 1999 through the end of last year—encompass two powerful bull markets as well as two punishing bear markets.”

While a long-term track record is critical, investors also want to make money now. Happily, our one-year stock profit gain of 67% more than doubled the S&P and Wilshire. MoneyShow.com recently named our MGIC Investment Corp. (MTG) purchase recommendation top performer for all of 2013 and shared our contrarian perspective on select year-end bounce candidates. Our MTG purchase recommendation also led Dick Davis Investment Digest’s 2013 list of stock picks—the second consecutive year for The Turnaround Letter’s top billing. Last year,Investment Digest recognized our November 2011 OfficeMax (OMX) purchase recommendation as its “best performer (by far)” for 2012—beating out 50 reputable competitors, proclaiming that The Turnaround Letter “clearly has skill at selecting promising rebound candidates from a field of beaten-down stocks, many of which may never recover.”

Recognition from impartial, trustworthy sources like these simply serves to illustrate the obvious: Stock advice is only as reliable as the person giving it.

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Tupperware: Not a Good Fit as a Turnaround Stock

At first glance, the shares have decent appeal as a turnaround investment. Looking deeper, however, the fundamentals are not as strong and stable as they appear. Surplus cash flow is tight, a key driver is weakening, it is increasingly reliant on China and has other nagging issues. We don’t see the new CEO as a catalyst for change. Despite the “first glance appeal”, Tupperware isn’t a good fit as a turnaround stock. 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."