Originally posted by adityancs
As per the advice of my friends, I have taken a small position in GATI. I know a very little about various factors to be considered on 'TURNAROUND CANDIDATES'. I request TED members to guide me by furnishing name of books, websites for deep study on the topic. |
I have not found any specific book dealing only on turnarounds. But Lynch has given good guidelines on how to proceed.
Some points to ponder:
1. Look for companies with good management which have fallen on bad times
2. Debt should not be too much.
3. Turnarounds need to be watched for quarterly updates.
4. Look for insider buying which is often a good sign although not always.
5. Look for extreme pessimism/disbelief from market participants, inspite of clearly visible good news.
I currently follow two turnarounds:
First is andhra petro which was around 14 since I tracked it. There were posts which expressed pessimism which u can see in the thread on andhra petro. Most imp was promoters started buying like crazy around 15-16. And plant started production on increased capacity since may 2010.
Another one I am following is shanthi gears. Details are posted on the thread on shanthi gears. Again good management and company going in for restructuring.
Same with elecon. Again revamp of operations and management team.
You wont find too much in terms of return ratios, eps etc while looking at fundamentals. One needs to look at two to four quarters down the line and be ready to weather some short term pain.
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