Introduction
Turnaround stock investing is a single stop resource for investors interested in investing in deep value turnaround stocks with a strong probability of recovery within in a 1 year period.
We are dedicated to creating a community of investors that want to participate in a site that offers its members continuous learning towards the best practices of turnaround stock investing. The community we are serving consists of both newbe investors and seasoned hedge fund managers. We also offer investors that may not have the time or inclination to perform turnaround stock due diligence access to our stock ideas.
Our job is to help you gain an enduring edge investing turn around stocks. If the key to success were just financial analysis every value hedge fund and MBA would be rich. Facts are most value hedge funds cant beat the markets. The reason being investors don’t know how to manage their portfolio when emotions are out of control from the inevitable drawdowns and losses that occur in deep value investing. We believe that learning how to deal with these emotions is just as important as the financial and technical analysis performed by an investor. Turnaround stock investing will mentor members on how to deal with the highs and lows that come with buying deep value stocks.
What makes us different from other value investing sites
Turnaround stock investing approach is based on a three-prong strategy. We employ the use of technical and fundamental analysis along with a unique portfolio management system. Technical analysis puts the probabilities in our favor. Fundamental analysis puts reason in our favor. Portfolio management allows for the possibility of overall portfolio gains even if just a small percentage of turnaround stocks purchases are winners.
Turnaround Stock Investing is designed to help value investors
1. Continually improve their financial analysis and technical analysis skills
2. Develop a Systemized search process for turnaround stocks
3. Improve your mindset to deal with the inevitable drawdowns and losses associated with turnaround stock investing
We do not promise easy money get rich quick schemes. There is no options trading, no day trading, no daily market analysis. Just old fashioned stock picking with a wise approach to portfolio management.
Turnaround Stock investing will have in one place all the resources you need. We will be continually building a library of best practices and case studies for financial statement and technical analysis of turnaround stocks. We will offer numerous articles and methods to help deal with the highs and lows of deep value investing. We are the only site solely focused on combining superb fundamental turnaround stock analysis with psychological tools to help you create an investing edge.
The site will be providing members with turnaround stocks to consider as soon as they start to set up within our fundamental and technical criteria. Our approach is towards patience and simplicity.
Due Diligence and the Turnaround Prescription
Turnaround stock investing will teach you our due diligence process which is critical to identifying a turnaround candidate. The goal of due diligence is to determine if a company has the capability and resources to resume growth and generate reasonable Operating Margins from current depressed levels.
You will learn how to determine if a company’s turnaround plan meets the criteria of what we call the Turnaround Prescription and the probabilities of success and failure for the turnaround.
The Turnaround Prescription requires that a company’s management team has created and is implementing a detailed and strategic plan to accomplish substantially all of the following:
- Increase gross margins while simultaneously reducing operating expenses to a targeted operating margin
- Introduction of new or improved products or services to core customers
- Immediate improvements in working capital turnover
- Focused on implementing new standards of accountability and employee involvement
The Turnaround Prescription was developed by our founder Bruce Berger, who has been investing into and or operating both public and private companies for decades.
The Turnaround Prescription will help you identify, analyze and determine the odds of a successful turnaround among the universe of underperforming companies.
Uncertainty and Estimating Risks
Turnaround stock investing is not classic Graham and Dodd where you get a dollar for 50 cents. It’s important to remember that even the best operating management teams incorporating a solid plan may fail in the turnaround attempt. As a result our philosophy is to purchase turnaround securities as part of a diversified portfolio.
We incorporates Howard Marks’ “second level thinking “ criteria for gauging the odds of a turnaround. Second level thinking examines all the possible outcomes that can happen with a turnaround and assigns a probability to each occurring. It’s a 3D examination of how a company’s balance sheet, cash flow, operating leverage and management, mix under various operating scenarios. Will a company be able to survive at the peak of pricing pressure? Where are we in the industry cycle that the company participates in? When we view the odds in our favor for a large return we make the purchase even with the possibility we may be wrong. A portfolio of similar type of turnarounds allows an investor to spread the risks.
Managing portfolio of turnaround stocks
Turnaround stock investing is not a conventional value investing site. We use both technical and fundamental analysis. Combining both techniques is a powerful mechanism for raising our odds of success.
Technical analysis allows us to gauge the psychological emotion behind the stocks price action. Over the past 30 years we have found that successful turnarounds repeats similar technical stock price action.
We do not double down on stocks that have broken significant stock price patterns. We have found over the past decades that the principal enemy to great returns is not the lack of knowledge or poor research. It is continuing to buy stocks that are falling and breaking important price pattern. Our portfolio strategy assumes that 20 to 30% of our stocks picks generate 80% of the return for portfolio. We believe Pareto’s 20/80 principal is alive and well in the money-management world.
