Bankruptcy/Chapter 11 / Bonds / Banks / Post-Bankruptcy Stocks

Must-Have Investment Reads


Recommends titles for the value investor... straight from the shelves of The Turnaround Letter

Dear Chairman: Boardroom Battles and the Rise of Shareholder Activism by Jeff Gramm: Published in 2016, this engaging text recounts several of the more colorful shareholder efforts to change bad management practices. Each chapter is based on an actual letter written by an activist investor, starting with Benjamin Graham's comparatively genteel pressure on Northern Pipeline to the highly entertaining letter written by Daniel Loeb to Star Gas wondering whether the CEO's 78-year-old mother belongs on the Board of Directors.

Security Analysis by Benjamin Graham and David Dodd: One of the most influential books on investing and originally published in 1934, it describes the timeless value investing concepts and methods of Benjamin Graham: the “father of value investing.” This read is considered the foundation for Warren Buffett’s success and recent editions include commentary by some of today’s most successful investors.

The Intelligent Investor by Benjamin Graham: The sub-title says it all: “the definitive book on value investing.” Graham’s classic best seller, this text describes the principles of value investing and applies them to selecting securities. It also discusses the concepts of thinking as an owner of a business and the “margin of safety.” This is considered by Warren Buffett to be one of the most important reads in all of investing.

The Aggressive Conservative Investor by Martin J. Whitman: Whitman’s classic book draws from his very successful experience as a deep value investor. This text discusses his perspective on being a minority shareholder, how to gauge risk and how to apply his four essential characteristics necessary for investing in a company—all built upon solid business and investing fundamentals that he describes in detail.

Stocks for the Long Run by Jeremy Siegel: This is a popular and contemporary take on investing and is considered by many to be the definitive guide to financial market returns and long term investment strategies. The author is a professor at the Wharton School of the University of Pennsylvania.

Extraordinary Popular Delusions by Charles MacKay: This classic book on investing, market psychology and gullibility is just as relevant in today’s bitcoin world as it was in 1841 when it was first published. Scottish journalist Mackay tells the stories of many of history’s notable bubbles and investment frauds and illuminates how human nature and its inherent weaknesses never really change.

Corporate Financial Distress and Bankruptcy by Edward Altman and Edith Hotchkiss: This is a more scholarly look at corporate distress and bankruptcy. It is really a must read for students and professional involved with distressed investing or loans. The authors do a nice job of explaining theory to practitioners and the practical side of bankruptcy to theoreticians. Edward Altman is a professor at New York University, and Edith Hotchkiss is a professor at Boston College.

Common Stocks and Uncommon Profits by Philip A. Fisher: Phillip Fisher is one of the most influential investors of all time. His investment philosophies are regarded by many as gospel. Ken Fisher is a successful money manager and a regular columnist for Forbes magazine.  He is also Philip Fisher’s son.

The Wall Street Waltz: 90 Visual Perspectives, Illustrated Lessons from Financial Cycles and Trends by Kenneth L. Fisher: In this title the author looks at 90 of the most revealing and provocative financial charts ever assembled and analyzes them according to their origin, historical significance and its relevance to today’s market. A great resource for decades of interest rates, property prices, etc.

The Vulture Investors by Hilary Rosenberg: The author takes you on a fast-moving journey through some of the major bankruptcies of the 1980’s and 1990’s. You get a good preview of the investors that dabbled with distressed bank debt during that period.

Fooled by Randomness by Nassim Nicholas Taleb: The author, once considered an investment heretic but now thought of as a genius and the essence of mainstream, uses stories and anecdotes to illustrate how the world is much more random than we believe. He describes how human nature leads us to over-estimate causality, which is often followed by our mistakes. This book opens the reader’s mind to a view of the world that is frequently hidden.

Why Companies Fail by Harlan D. Platt: An academic look at strategies for detecting, avoiding and profiting from bankruptcy. The author is a business professor at Northeastern University.

Bankruptcy Investing by Ben Branch: Great introduction and overview of the world of distressed and bankruptcy investing. The author managed to synthesize a very complicated subject into an easy-to-read and understandable book. The author is a business professor at the University of Massachusetts. He has served as the trustee in several high-profile bankruptcies.

When Genius Failed by Roger Lowenstein: Entertaining and insightful reading on the perils of high finance. Among other things it shows that even Nobel prizewinners can fail at investing.

The Most Important Thing by Howard Marks: Warren Buffett’s quote on the title, “This is that rarity, a useful book” conveys the merits of this highly-readable and brief (180 pages) 2011 book on thoughtful investing. Marks discusses how to define, recognize and control risk, and comments on contrarianism, finding bargains and “knowing what you don’t know.” Marks co-founded and runs Oaktree Capital Management and is widely considered one of the today’s icons of value investing. 

Against the Gods by Peter L. Bernstein: Peter Bernstein was one of the most insightful writers of our time. His book provides a comprehensive history of man's efforts to understand risk and probability, beginning with early gamblers in ancient Greece, continuing through the 17th-century French mathematicians Pascal and Fermat and up to modern theory. Barron’s describes the book as “an extremely readable history of risk.…”

Value Investing, A Balanced Approach by Martin J. Whitman : A must read for all thoughtful investors interested in a rational, disciplined, risk-averse template for successful long-term compounding. Marty Whitman has been active in deep value and distressed investing for more than half a century. He runs a successful investment management firm.

Margin of Safety by Seth A. Klarman: Seth Klarman, the portfolio manager of The Baupost Group, is a very successful practitioner of the value investing strategy. In this book, he sets out to educate the reader on this concept, stressing the advantages of a risk-averse approach. Although Margin of Safety is currently out of print, the title is still available in .pdf format from various online sources.

Devil Take the Hindmost by Edward Chancellor: In Devil Take the Hindmost, Chancellor takes an entertaining, albeit sobering, look at the history of speculative manias and the mass delusion that surrounds them. The author is a columnist for the Financial Times as well as an investment strategist at a large money management firm.

The Snowball: Warren Buffet and the Business of Life by Alice Schroeder: A frank account of Buffett's life; Alice Schroeder strips away the mystery that has long cloaked the word's richest man to reveal a life and fortune erected around lucid and inspired business vision and unimaginable personal complexity.

John Neff on Investing by Jeff Neff: In this title the author explains how he scoured the daily list of stocks hitting new lows, the "dusty rag and bone shop of the market," to find out-of-favor companies with low price/earnings ratios, those growing faster than seven percent a year, that paid generous dividends. He shows how to distinguish misunderstood and overlooked stocks from those with lackluster prospects. The author was the long-time manager of the Vanguard Windsor Fund and compiled an enviable investment record.

Dow 36,000 by James Glassman and Kevin Hassett: A classic piece from the late 1990s that made the case that stocks, if bought in diversified packages and held over long periods, would have not much more risk than bonds and therefore the price of stocks should rise rapidly to equate the dividend yield on stocks with the return on risk free bonds (which meant that, as of the late 1990s, the Dow should have shot to 36,000). Although it has proved silly, and one of the original authors now opposes his original idea, it has a good parable about how to think about markets, and it is a readable book.

A Random Walk Down Wall Street by Burton Malkiel: The classic piece on how tough it is to beat markets. The author is a professor at Princeton University, and one of the early proponents of the efficient market theory.

The Big Short by Michael Lewis: One of the best analyses of the 2008 financial meltdown told through the stories of several investors who profited from it. The book is both entertaining and enlightening about the need for a healthy skepticism of Wall Street. The movie by the same title is also well-worth the 130 minutes and stars Ryan Gosling, Steve Carell and Christian Bale with appearances by Brad Pitt.

One Up on Wall Street by Peter Lynch: One of a number of books by the former outstanding Fidelity Magellan Fund manager. This book was his best and contains basic analysis that is still valid today.

Lords of Finance: The Bankers Who Broke the World by Liaquat Ahamed: This text tells the story of how four central bankers once dominated the world of finance in the early 1900’s. Not only does Ahamed provide fascinating insight into their personalities, he also illustrates how these men were all too human, using tools and methods they believed were effective, yet they were unable to prevent the financial crises that plausibly led to World War II. Highly readable, this book remains relevant in our own time as central bankers continue their experiments with global monetary policy.

Capital Ideas by Peter Bernstein: One of a number of books by Peter Bernstein, both a Wall Street practitioner and academic writer. This book is about the history of Wall Street investing techniques and how they arose from the ideas of academics.

Black Swan by Nassim Taleb: A popular book about how markets are more volatile than is often assumed by many investment professionals who use standard statistical techniques.

Reminiscences of a Stock Operator by Edwin Lefevre: Long believed to be written by the legendary speculator Jesse Livermore in 1923, this book is the story of how speculators manipulated and profited from the stock market in its earlier days. Many of the principles Lefevre uses to pick stocks still echo today in the short-term mindset of Wall Street.

Seeking Wisdom: From Darwin to Munger by Peter Bevelin: A wonderful book on wisdom and decision-making written by a wise decision maker; it is a collection of his simple but big ideas.

Liar’s Poker by Michael Lewis:  A first-hand description of life on the trading floor of a big investment bank in the go-go 1980’s. It teaches useful lessons about what the securities salesman on the other end of the phone really means.

Principles: Life and Work by Ray Dalio: Dalio is the founder and co-chairman of Bridgewater Associates, the largest hedge fund in the world. His firm has been described as cult-like, so this new (2017) book provides some insights into his very unique and complicated approach to running a giant hedge fund and managing his life. Among its voluminous 569+ pages are probably some nuggets to help every investor.

Identify & Profit from Distressed Investing

Free Report: Turnaround Investing Mistakes

Turnaround Investing Blog

Turnaround Investing Blog

Is there value in bankrupt PG&E’s stock?

In nearly every case, the shares of a company in bankruptcy become worthless. In very rare cases, however, they can become great investments. W.R. Grace (NYSE:GRA) shares produced a 75-fold return, as an example. With California utility PG&E (NYSE:PCG) now in bankruptcy, the range of possible outcomes for its equity is wide.

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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.

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Turnaround Letter Stock Pick Named Top Performer of 2017


stock market advicex


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."