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Bruce Kaser

Chief Analyst, Cabot Turnaround Letter and Cabot Value Investor

Bruce Kaser has more than 25 years of value investing experience in managing institutional portfolios, mutual funds and private client accounts. He has led two successful investment platform turnarounds, co-founded an investment management firm, and was principal of a $3 billion (AUM) employee-owned investment management company.

Previously, he led the event-driven small/midcap strategy for Ironwood Investment Management and was Senior Portfolio Manager with RBC Global Asset Management where he co-managed the $1 billion value/core equity platform for over a decade. He earned his MBA degree in finance and international business from the University of Chicago and earned a Bachelor of Science in finance, with honors, from Miami University (Ohio).

From this author
Putting your money in an S&P 500 index fund has long been deemed a safe way to diversify. But the S&P isn’t all that diversified anymore.
Other than the buyout of Kaman (KAMN), it’s been a relatively quiet week for company-specific news.


Regarding Kaman, the company announced that it will be taken private for $1.8 billion, or $46/share, a huge 100%-plus premium over the prior day’s closing price. The market has had little confidence in Kaman’s turnaround, despite what we saw as evidence that impressive changes are underway, led by its capable new CEO. The huge premium is at a discount to our $57 price target, but we’re fine with the deal as it produces a reasonable return, in cash, today, compared to a slog for a year or more while the turnaround plays out.
Moving Ironwood Pharmaceuticals (IRWD) to Sell
In investing, like football, competition is tough, rivalries are strong and the money and stakes are high. So, what lessons can investors learn from the NFL Playoffs?
Earnings season has arrived, and with it could be a recalibration of investor expectations for stocks broadly.

The S&P 500 Index seems reasonably priced at 19.5x estimated 2024 earnings. But nearly 30% of the index’s weight comprises Magnificent Seven stocks, whose average multiple is 33x. Estimated earnings growth rates for these Mag Seven stocks, which average 19% for each of the next five years, set a high bar. When high expectations meet less-high reality… well, investors know what can happen to stock prices. And, any wobbling in the largest stocks can send the market broadly lower. As Dennis Gartman, the legendary and now-retired writer of The Gartman Letter, frequently said, “When the generals leave the field, the rest of the army follows.”
In today’s note, we discuss the earnings reports from Wells Fargo (WFC). Please note that our comments on Well’s earnings didn’t make it into the podcast.
It’s been widely noted that the stock market’s sloppy start to 2024 is among the worst in a decade, or longer. Traders and TV commentators carry on about how the first trading day, or week, or month, sets the tone for the entire year. “How goes January, so goes the year” is a frequently bandied saying. It’s enough to make an investor toss in the towel and wait until 2025.

The longer I am in the investing world, the less I listen to this banter. It all sounds great, and maybe there are some years in which these ultra-short-term trends-as-predictors pan out, but they are so unreliable that they are worthless at best. Even if they had a 100% accuracy rate, why make a bet that this perfect record will continue?
Growth has trounced value over the last five years, but is value investing dead? Here are six facts that should make you think twice.
In today’s note, we discuss the recent earnings reports from Walgreens Boots Alliance (WBA). Our note also includes the monthly Catalyst Report and a summary of the January edition of the Cabot Turnaround Letter, which was published a week ago Wednesday.
Thank you for subscribing to the Cabot Value Investor. We hope you enjoy reading the January 2024 issue.

We review the stock market’s remarkable performance in 2023 and highlight our recommendations that produced notable gains along with our clunkers. Our view on the 2024 market is that stocks will have an average year, with the Magnificent Seven producing flat/modest returns at best. Readers should keep in mind quotes from Yogi Berra and Warren Buffett when considering market forecasts. Onward to 2024.

Please feel free to send me your questions and comments. This newsletter is written for you and the best way to get more out of the letter is to let me know what you are looking for.
Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the January 2024 issue.

In this issue, we discuss our Top Five Stocks for 2024. We also dissect and review what happened in the capital markets in 2023 and offer our outlook for the coming year.

This month’s Buy recommendation, Mohawk Industries (MHK), is a major global flooring manufacturer whose shares are deeply out of favor. We discuss three key questions when considering an investment in a cyclical company and describe how Mohawk passes all three with flying colors.
There were no earnings reports or ratings changes this week. Due to the holidays, we will not be publishing a Friday note or podcast next week. The Cabot Turnaround Letter will be published next Wednesday, and our Friday note and podcast will resume on January 5, 2024.
The PEG ratio is frequently used as a convenient rule of thumb, but its sole use can produce wildly wrong valuations. Here’s why.
This might be the first time anyone has described singer-songwriter Katy Perry as a sage observer of the stock market. Her song, “Hot and Cold” opens with the lyrics, “You change your mind / like a girl changes clothes.”

This perfectly captures the changes in sentiment in the stock market over the past two months. Going into October, the market was fully locked into the view that elevated inflation would endure, that 10-year Treasury yields were headed above 5% and that there was no hope for small-cap stocks or any group of stocks other than the Magnificent Seven mega-cap tech stocks. Dark days and a hard landing were undoubtedly ahead.
There were no earnings reports or ratings changes this week.
When a band interviews a possible new hire, a common question is, “Who are your influences?” No musician was raised in a vacuum – everyone gets their musical foundations and inspirations from someone else. The Rolling Stones, for example, were heavily influenced by the Chicago blues and R&B scene including Muddy Waters and Bo Diddley. Learning someone’s influences helps the interviewer understand how a musician got to where they are and perhaps where they are headed in terms of their musical style, and provides some insight into what motivates the musician’s passion.
There were no earnings reports or ratings changes this week.
Should the much-hyped Magnificent Seven rally peter out, investors will need to look elsewhere for solid returns. Following activist shareholders is a promising starting point.
Thank you for subscribing to the Cabot Value Investor. We hope you enjoy reading the December 2023 issue.

Artificial intelligence-inspired investors are partying like it’s 1999. We’re finding attractive value elsewhere, in discarded industrials like our new Buy recommendation, CNH Industrial (CNHI).
In today’s note, we discuss the recent earnings reports from Duluth Holdings (DLTH) and Kohl’s (KSS). Our note also includes the monthly Catalyst Report and a summary of the December edition of the Cabot Turnaround Letter, which was published on Wednesday.
Even the most well-meaning value investors can fall victim to this common faux pas, but avoiding it is easier than you might think.
Rather than ignoring or hiding from losing positions, investors should turn those losers into valuable portfolio assets or look to capitalize on underperforming stocks where the selling has been overdone.
Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the December 2023 issue.

Every investor has loser stocks. We discuss two ways to convert this year’s losers into assets and winners, including tax loss selling and buying shares that others have discarded for artificial reasons. Last year’s crop of bounce stocks performed exceptionally well. We discuss five for this year that look promising.

One of our more productive methods for sourcing new ideas is to see what other like-minded investors are buying. We discuss how to refine the vast data in 13F filings and review four from the most recent batch of filings that look attractive.

This month’s Buy recommendation, Fidelity National Information Services (FIS), was used in a February 2023 article about how we evaluate candidates. It was too expensive then, but its recent 26% share price slide and encouraging fundamentals make it attractive to buy now.
The best poker players usually are stone-faced. That means that they show no emotions, make no unusual or unplanned moves, and most important, have no “tells.” A “tell” is any change in a player’s behavior, attitude or other actions that indicate the strength of the cards they hold in their hand. Common tells are changes in their chatter, eye contact, twitches and frequency of checking their hole cards.
The dominance and crowded trade around the “Magnificent Seven” stocks prompts something of a contrarian question: Have we reached the stock market end game?
Most stocks produce lackluster returns. A recent study1 by Hendrick Bessembinder, a professor at Arizona State University’s WP Carey School of Business, looked at U.S. stock market returns from 1926 to 2022. Nearly 60% of all stocks detracted from shareholder value during this time period. From 1926 to 2016, half of the total wealth created in the stock market was produced by only 90 stocks. By 2022, the number was only 72 stocks.
This week’s note includes our comments on earnings from Advance Auto Parts (AAP), Macy’s (M), Tyson Foods (TSN) and Vodafone (VOD). The earnings season is winding down, with Kohl’s (KSS) reporting next Tuesday (Nov. 21) and Duluth Holdings (DLTH) reporting on November 30.
Underperforming “loser stocks” are an inevitable part of investing, but they can still provide value to your portfolio, especially at year’s end.
Last week, the Hong Kong Monetary Authority hosted hundreds of bankers including the heads of 90 global financial institutions to discuss the current status and future outlook for the world’s capital markets. Despite the increasingly tight grip that China has on Hong Kong, which is leading to a diminished relevance for the island state, notables including Morgan Stanley CEO James Gorman and Goldman Sachs head David Solomon participated in the in-person meetings. The draw: Hong Kong remains an important gatekeeper for access to mainland China’s financial markets.
Moving Ironwood Pharmaceuticals (IRWD) to Sell