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.

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. It looked like this (click here to download a copy):

The Turnaround Letter: Volume 1, Number 1

Back then, in what seems like the Stone Age compared to today, George created the first Turnaround Letter on an IBM PC that had two floppy drives and no hard drive. He uncovered most of his ideas through research found in hard copy documents at the library as the public internet was still a decade away. Primitive electronic communication was based on a Hayes modem that chattered away at 2400 bits/second, using the early dial-up service CompuServe. (Ironically, Hayes went bankrupt as it couldn’t keep up with the rapidly changing technology – a useful lesson for tech investing).

Stock prices were quoted in 1/8ths, the Dow Jones Industrial Average closed the year at 1896 and the 10-year Treasury yielded 7.3%.

The technology clearly has changed since the “olden days”. Today, Turnaround Letter subscribers around the globe receive the letter and other commentary instantly by email that is often read on mobile phones, along with social media posts and (coming soon) podcasts and (eventually) videos on Instagram.

What hasn’t changed in 32 years? Our investment philosophy of selecting out-of-favor companies with real value and imminent changes that can significantly improve the companies’ prospects.

As George wrote in that first letter:

Over the coming months we will bring you news and recommendations on the potential big winners that most of Wall Street ignores -- troubled companies on the verge of turning around.

Decades after those words were written, Wall Street still ignores turnaround stocks. We believe that even in a world where academics and commentators proclaim that the stock market is efficient and that these opportunities don’t exist, Wall Street will continue to ignore these types of stocks.

Our timeless investing process, consistently applied, has helped drive The Turnaround Letter’s market-beating investment returns (please see our independently-verified performance by Hulbert Ratings). We hope to continue providing these kinds of returns to you over the next 32 years.

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Turnaround Investing Philosophy: 32 Years Later, Some Things Never Change

Recently I was asked how my investing perspective changed over the 32 years of publishing The Turnaround Letter. It's a fascinating question because change is constant, and often beneficial (although that's not a given) in the business world. If change is the norm, can investing principles stay constant? I firmly believe that they can. 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."