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Turnaround Letter
Out-of-Favor Stocks with Real Value

December 31, 2020

This month saw several major mergers/acquisitions and changes in CEOs and at least two high-profile activist campaigns.


This note is a Thursday edition of our regular Friday note, as tomorrow is the New Year’s holiday.

No companies reported earnings since our last note.

Ratings Changes:
Royal Dutch Shell (RDS/B) – Reducing our price target to 53 from 85.

Thursday, December 31, 2020 Subscribers-Only Podcast
Covering recent news and analysis for our portfolio companies and other topics relevant to value investors.

Today’s podcast is about 11 minutes and covers:

  • Brief updates on:
    • Biogen (BIIB) – reiterating our Buy rating after some recent volatility.
    • Royal Dutch Shell (RDS/B) – reducing price target to 53 from 85 due to lower oil and gas prices and lower refining margins.
    • Wells Fargo (WFC) – not likely to start share repurchases until at least the fourth quarter of 2021.
    • Gannett (GCI) – two favorable updates: Gannett has terminated its management agreement with Fortress Investment Management, and Michael Reed will depart Fortress to become full-time CEO and chairman of Gannett.
    • Conduent (CNDT) – toll road traffic is down only 9% from a year ago.
    • General Motors (GM) – if true, rumors of Apple entering the electric vehicle market would rattle the industry, but we don’t think a full entry is likely. GM also sold their Russia car production facility.
    • Molson Coors (TAP) – favorable weekly sales data.
    • Toshiba (TOSYY) – two activists are pressuring the leadership. We view this pressure favorably.
    • Baker Hughes (BKR) – U.S. rig count continues to improve.

  • Elsewhere in the market:
    • Two “Easts” (Washington, DC and China) could disrupt capital markets in 2021, with some related news from Apple.

  • Final note

Please feel free to share your ideas and suggestions for the podcast with an email to either me at or to our friendly customer support team at Due to the time limit we may not be able to cover every topic each week, but we will work to cover as much as possible or respond by email.

Catalyst Report
This month saw several major mergers/acquisitions and changes in CEOs and at least two high-profile activist campaigns. We expect heavy catalyst activity in 2021, particularly as the strong stock market and accelerated changes in the competitive environment heighten the sense of urgency by managements and shareholders to take bold action.

The Catalyst Report is a proprietary monthly report that is unique on Wall Street. It is an extensive listing of companies that have experienced a recent strategic event, such as new leadership, a spin-off transaction, interest from an activist investor, emergence from bankruptcy, and others. An effective catalyst can jump-start a struggling company toward a more prosperous future.

This list is intended to be comprehensive. While not all catalysts are meaningful, some can bring a much-needed positive change to out-of-favor companies.

One highly-effective way to use this tool is to pair the names with weak stocks. Combining these two traits can generate a short list of high-potential turnaround investment candidates. The spreadsheet indicates these companies with an asterisk (*), some of which are highlighted below. Market caps reflect current market prices.

You can also access our entire Catalyst Report archive in sortable spreadsheet format here.

Huntington Logo

Huntington Bank (HBAN) $12.8 billion market cap – Ohio-based Huntington will acquire Detroit-based TCF Financial in an all-stock deal. On paper, this combination makes a lot of sense: cost-cutting, earnings accretion and strong market overlap. But the awkward governance structure and generally low success rate of bank mergers make this story more complicated and worth watching. Bank stocks in general are out of favor, adding some margin of safety.

intel Logo

Intel Corporation (INTC) $202 billion market cap – Activist Dan Loeb is hammering away at Intel for its botched execution in recent years. Given the shares’ low expectations, large cap investors might now want to take a close look at Intel.

Caleres Logo

Caleres (CAL) $480 million market cap – This small cap company is struggling, but owns the valuable Dr. Scholl’s brand along with other labels, and owns the Famous Footwear shoe store chain. The board appears to be pressuring the CEO/chair with the appointment of a president.

Howard Hughes Logo

Howard Hughes Corporation (HHC) $4.2 billion market cap – This Dallas-based real estate company will benefit from stronger residential and commercial real estate markets. Higher oil prices should also support its Texas properties. Activist Bill Ackman is the long-running chairman in what appears to be a long-term buy-and-hold type of position.