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.

Exchange Traded Funds (ETFs)

George Putnam's Strategy to Beat Passive Investing Trend

MarketWatchhas some advice for investors: "Own out-of-favor stocks held by active funds when they start beating indices again." Pointing out the difficulties currently faced by fund managers, the article cites George's observation that this "dynamic sets up a clever way to place a contrarian bet against the ETF boom." Brush cites three of George's recent stock picks and touts The Turnaround Letter's straightforward investing approach.  

A few of key points from the write-up are summarized below:

  • The author, Michael Brush, describes how the heavy inflows into index-tracking ETFs create a self-fulfilling prophecy that makes active managers’ underperformance worse. Brush cites The Turnaround Letter for a clever strategy to place a contrarian bet against the powerful ETF trend.
  • Putnam suggests investors buy stocks that are not in the major indices, that are “left behind.” These stocks may carry lower valuations.
     
  • If the ETF rush fades, these “left behind” stocks might perform particularly well, especially if heavy ETF selling pushes down stocks that are in the major indices.
     
  • MarketWatch cites three of the five “left behind” stocks that I highlighted in the May edition of The Turnaround Letter: Blackstone (BX), Las Vegas Sands (LVS) and Norwegian Cruise Lines (NCLH).
     
  • The article continues with three reasons cited by Jeffrey Gundlach (head of DoubleLine Capital) at the 22nd Annual Sohn Investment Conference that active managers should start outperforming ETFs.

You can access the the full article here—it is an interesting read! 

*MarketWatch, published by Dow Jones & Company, tracks the pulse of markets for engaged investors with more than 16 million visitors per month. 

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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."