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.

Post-Bankruptcy Stocks

Number of Public Companies Shrinking?

Excerpted from the August 2016 Issue

When recently asked how many companies are in the Wilshire 5000, we naturally answered, “Five thousand.” However, on looking into it further, we were surprised to learn that there are only 3,607 companies in the index, which includes all U.S.-headquartered equities with readily available prices. Moreover, this is down from 7,562 companies in the index in 1998. Meanwhile, the number of listed companies outside the United States increased to 39,400 from 30,700 in 1996. What is going on here in the U.S. stock market?

The unusually large number of mergers since 1996 is one cause of the drop-off, according to a 2015 report by the National Bureau of Economic Research*. Going private, like Dell’s $25 billion deal in 2013, which will soon take EMC with it, is another major reason. Another contributor: failing to meet listing standards. The recent surge in energy company bankruptcies will boost delistings even further.

On top of all that, fewer companies are going public. There isn’t a shortage of new companies in the economy – this number actually continues to increase.  Rather, there doesn’t seem to be much incentive to go public these days. Promising young companies can get plenty of private funding, and technology-based businesses may need less capital than old-line manufacturers or bricks and mortar retailers. Furthermore, volatile stock markets and increases in shareholder and regulatory demands are driving companies away from the public market.

These trends seem likely to continue. What is less clear is their impact. Do valuations increase for the remaining public companies as the supply diminishes?  Will individual investors have less access to the best new companies? What will happen when interest rates rise and close off the spigot of cheap money driving private deals? One thing is certain: The shrinking list of Wilshire companies gives readers a sure-win trivia question to ask their friends.

* The U.S. Listing Gap, NBER Working Paper 21181 by Doidge, Karolyi and Stutz, 2015.

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Books we Recommend for the Holidays

Looking for a stocking-stuffer for the investor or businessperson in your life, or perhaps for yourself? Don’t have a lot of time to stroll through a brick-n-mortar bookstore or wonder which books among Amazon’s endless inventory are actually worth buying? Our list, assembled by George Putnam and Bruce Kaser, includes some fascinating new titles as well as several timeless classics about successful investing and leadership. All are valuable reads which any recipient will be thrilled to dive into. Read More.

EV/EBITDA: What Is It & Why Are We Using It More?

In reading recent editions of The Turnaround Letter, you have probably noticed that we are increasingly using EV/EBITDA as a valuation measure, rather than the better-known price/earnings multiple.  We thought it might be useful to describe this measure and why we like it.

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."