Corporate turnarounds are among the most intriguing of investment opportunities: They offer both the potential of market-beating performance and the satisfaction thatcomes with backing an underdog and then seeing it prevail—of finding value where others did not.
When following a corporate-turnaround investment strategy, an investor should possess high levels of both insight and foresight, a two-year supply of antacid and the psychological balance to withstand the highs and lows that develop along the road. And there will be highs and lows. Unfortunately, the risks of a turnaround-oriented investment strategy are just as notable as the potential. The fact is, many companies ultimately prove unable to respond effectively to the competitive, structural or financial changes that led to their decline in the first place.
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When following a corporate-turnaround investment strategy, an investor should possess high levels of both insight and foresight, a two-year supply of antacid and the psychological balance to withstand the highs and lows that develop along the road. And there will be highs and lows. Unfortunately, the risks of a turnaround-oriented investment strategy are just as notable as the potential. The fact is, many companies ultimately prove unable to respond effectively to the competitive, structural or financial changes that led to their decline in the first place.
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