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.

Small Cap / Food, Beverage, & Tobacco

Amplify Snacks--Hershey’s Acquires at 71% Premium

Specialty snack maker Amplify Snack Brands (BETR) agreed to be acquired by the Hershey Company for $12/share, a 71% premium over Friday’s closing price of $7/share. With the overall food industry showing stagnant growth, snack companies like Amplify offer the food giants a rare opportunity to participate in a rapidly-growing segment.

We highlighted Amplify as a strong turnaround candidate in October (“Amplify Snack Brands Worthy of a Nibble”), describing how its stock had fallen nearly 60% from its October 2015 initial public offering price of $18, to its then-current price of $7.23.

Amplify’s weak share price caught our attention—we became much more interested as it offered a combination of real value with significant positive changes. Its emphasis on “Better-for-You” snacks with allergen-free and GMO-free ingredients, led by SkinnyPop, the nation’s #2 ready-to-eat popcorn brand, provided a strong and growing $400 million revenue base. With a controlling stake held by private equity firm TA Associates, the company had a patient and experienced owner that helped bring in several highly capable senior leaders to accelerate its growth.

For shareholders of Amplify, the acquisition by Hershey’s is a sweet deal right in time for the Holidays.

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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."