How to Buy a “Turnaround” Story

By John Del Vecchio  |  March 28, 2019

I love bankruptcies.

Don’t get me wrong. I don’t want to ever go bankrupt. I’m sure you don’t, either.

But, when it comes to publicly traded companies, those with bankruptcies on their resumes often catch my eye… because they can be wonderful investment opportunities.

How so?

Well, “bankruptcy” is a nasty stain on a company’s reputation. It means somebody did something wrong. Things didn’t work out. It fell into the abyss. Probably the stock price plunged, and investors were left holding a lot of empty bags. Often, they were unsuspecting investors…

But the legal process of bankruptcy allows the stain to be removed. Messes can be cleaned up… It’s just like throwing a little OxyClean on it and running it through a wash-rinse-and-dry cycle. That leaves a renewed, refreshed business in much better financial shape and ready to compete again.

Still, most investors tend to run away from anything with “bankruptcy” on its record.

That leaves a lot of undervalued assets for the picking and choosing by savvy investors…

Indeed, a couple recent Hidden Profits recommendations are companies that have emerged from bankruptcy. They’re businesses with strong brands and solid market positions.

They’ve also attracted the attention of savvy investors… billionaires… billionaires with better track records than even Warren Buffett. They just aren’t as well-known. They aren’t folksy. But they’re equally amazing at what they do. That’s build wealth, real wealth, over time…

There’s actually a lot buzz around one particular world-class billionaire who’s recently built a massive position in one of those Hidden Profits picks.

He wants better performance, and he’s hinted at pushing for a sale of the business. He’s pushing for change, and he’s getting it. The day-to-day management structure is being reorganized, for example.

More stuff will happen. So, there’s buzz around the stock now, too…

These guys are in a great position – maybe the best position – to take advantage of new laws that literally could spill billions of dollars in its coffers.

Because of lingering uncertainty about “execution” issues, it’s also ripe for takeover. In fact, there was already strong potential buyout interest before our world-class billionaire friend built his massive position.

Here’s a hint: The stock trades below $10 a share. And management already rejected an offer nearly 50% above today’s prices.

I’m confident this new billionaire on board will get more than that, too… confident enough that I think this stock could be an easy double from here. It’s practically a shoo-in.

He’s not even the only billionaire invested in the stock. As they say, the more the merrier.

He’s just getting started.

The time is now.

Last year, there were over $3 trillion in corporate takeovers, and 2019 could be even bigger. One deal could make a huge difference in your portfolio this year and beyond…

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John Del Vecchio

John Del Vecchio is the author of the bestselling book, Rule of 72: Compound Your Money and Uncover Hidden Stock Profits and What’s Behind The Numbers: A Guide To Exposing Financial Chicanery And Avoiding Huge Losses In Your Portfolio.

As the in-house stock market guru and forensic accountant for Dent Research, John stood on the shoulders of the great David Tice, James O’Shaughnessy and Dr. Howard Schilit, and built a framework of algorithms and a multi-factor grading system that has made him one of the more successful short-sellers around.

John is also the executive editor of our Hidden Profits newsletter and our trading service Small Cap All-Stars.

He graduated Summa Cum Laude from Bryant College with a B.S. in Finance and was awarded Beta Gamma Sigma honors. He earned the right to use the Chartered Financial Analyst designation in September 2001.MORE FROM AUTHOR