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.

Can A New CEO Lead The Stock Upward?

Excerpted from April 2014 Issue

One of the characteristics we often like to see in a turnaround stock is a change in top management. Many times the management that led a company into trouble is not going to be able to fix the problems. A turnaround often takes special skills that many CEOs lack. Moreover, a new leadership team can take a fresh look at the company’s business and not be burdened by past mistakes.

However, it can take time to execute a turnaround, even for a skilled group of executives. This led us to look at the class of new CEOs who took over struggling companies in 2012. As they approach their second anniversary in office, they should be beginning to hit their stride.

Our most recent contrarian investing newsletter identifies nine companies that, in addition to new CEOs, have some of the other key characteristics that we like to see in turnaround situations—including strong core businesses, well-known brands and decent balance sheets.

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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."