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Turnaround Letter
Out-of-Favor Stocks with Real Value

February 6, 2023

Today we are moving shares of Dow (DOW) from Buy to Sell. As the shares have reached our 60 price target, and as part of our effort to reduce the number of names on our recommended list to focus only on the most attractive turnarounds, the shares no longer belong in the turnaround portfolio.

Dow remains a fundamentally strong company with a valuable market position, healthy profits and free cash flow, a solid balance sheet and is led by capable management. However, we see little reason to raise our price target and the shares’ risk/return trade-off is not favorable enough to justify holding the position in a turnaround portfolio.

Since our initial recommendation in the October 2022 Cabot Turnaround Letter, DOW shares have generated approximately a 38% total return. In the comparable period, the S&P 500 returned approximately 12%.

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.