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Non-Tech : Turnaround Plays
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To: Robert Graham who wrote (139)12/8/1997 8:31:00 AM
From: Melissa McAuliffe  Read Replies (1) of 206
 
Bob,<I think we should first start with defining the different types of turnaround situations, and then selecting which one(s) we would be
interested in making plays on given some basic criteria. Next, we then
can define specific criteria that a stock> I think this is an excellent idea. Doesn't this somewhat go back to the issue of what caused the problem in the first place? e.g., a company that didn't meet earnings expectations but yet has growing revenues in a growing industry segment has different kinds of issues than a company whose revenues are decling along with eps. After writing this I realized that maybe we should start by defining what we mean by turnaround. I don't think a company has to be on death's door in order to be considered a turnaround. Maybe we have two things here 1)a company/stock turnaround or 2)a stock turnaround or 3)a little of both. IFMX falls into the first category and will probably take alot longer to turnaround than a company in category number 2. Again, this all depends on the reasons behind the stock price decline. I also think that defining the stock criteria later is a good idea becaus we don't want to be too rigid up front and miss some good opportunities. But I would prefer that we stay away from under $5 stocks and companies with either a)alot of debt or b) little cash. I would even forego my prior requirement that there be options if the opportunity was worth it. Though I still think options let you get some return on your money while you wait and/or offer downside protection. Though hopefully if we do this right we should be buying at the bottom or thereabouts unless something totally unforeseen happens.
Melissa
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