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.

ESG Investing: Doing Well by Doing Good

Investors of all types are increasingly seeing the merits of being more active and aware. Intangibles that go beyond traditional financial measures, such as how companies protect the environment, promote fair treatment of people and practice good corporate governance are becoming mainstream ingredients in analyzing companies.  

In this recent MarketWrap feature interview with Moe Ansari, George Putnam detailed the potential stock profit advantages to be found in "ESG"--Environmental, Social and Governance--investing. Once dismissed as irrelevant or even a detractor from good investment returns, there is a growing body of evidence that shows this ESG (aka "sustainable," "socially responsible" or "impact") approach actually contributes to better returns over the long run.

Putnam explains, "Management that is focused on these ESG issues and tries to do the right thing is likely do the right thing by shareholders over the long term, as well." He continues, "ESG generally reflects well on the management team, and a well-managed company will probably do the best over the longer term."

The logic is simple: If management is paying attention to ESG issues, they probably are paying attention to all the details of their business and are likely to be running it better. On the other hand, companies that ignore ESG issues may be taking risky short-cuts that could lead to lower long-term value and much higher legal and reputational costs. Many investors see the benefit in this approach, as nearly $7 trillion is invested in U.S. equities using ESG principles.

At The Turnaround Letter, we believe that ESG analysis is an important tool for successful long-term investing. We not only want to understand a company’s current ESG status, but also where it is headed. In many cases, we have found that companies with weak but improving ESG practices can be outstanding investments. Turnarounds in ESG practices often go hand-in-hand with turnarounds in financial results.

The MarketWrap interview goes on to detail several companies that score well on ESG practices and also have strong elements of a turnaround in their financial performance. Putnam concludes, "It can be very rewarding--both economically and in terms of feeling good--investing in these kinds of companies."

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Lessons from the 1st Turnaround Letter of 32 Years ago

In July, 1986, exactly 32 years ago, George Putnam sent the first Turnaround Letter to subscribers. Technology back then seems like the Stone Age, with hard copy research and primitive CompuServe dial-up service. Wall Street ignored turnaround stocks back then and continues to ignore them today. While technology has changed immensely in 32 years, The Turnaround Letter’s philosophy of selecting out-of-favor companies on the verge of turning around hasn’t changed. Our timeless process helped driven The Turnaround Letter’s independently-verified market-beating returns. 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."