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Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the February 2022 issue.



The market seems to be ignoring small- cap stocks. We highlight four high-quality small- cap companies with beaten down share prices. And, amidst the rubble of initial public offerings, we found three worthwhile companies whose shares trade below their IPO price. We also briefly comment on the market’s recent sell-down, and provide an update on the performance of our group of recommended stocks, which have held their value so far this year.



Our featured recommendation this month is Polaris (PII), the leading North American manufacturer of powersports equipment including off-road vehicles, snowmobiles, motorcycles and boats. Investors are overly -discounting near-term issues, leaving the shares significantly undervalued.



We note our recent price target increase for Baker Hughes Company (BKR), from 26 to 31.

Nine weeks ago, as the marijuana sector was completing what looked like a climax top, I took the risky step of taking partial profits in ten of our stocks, moving to a 45% cash position.

The expiration of our December covered calls is today, and I’m happy to report that four positions (GM, PINS, YETI, CGC) are closing for max profits

Investors appear concerned that ExxonMobil Corp. (XOM, NYSE) might have paid too much for XTO, while some have expressed concerns that the new assets increase the profile of natural gas in Super Oil’s production mix. The market has vastly overreacted to both concerns, furnishing savvy investors with an excellent opportunity...

WHAT TO DO NOW: Remain defensive, but keep your eyes open. Yesterday’s rally was noteworthy and may have started (or will soon start) a process of repairing the damage from the recent selling. That said, the market’s trends are still down and few stocks are in great shape, so the odds favor the repair process taking some time. Of course, we’re flexible, so if the buyers go wild, we’ll act, but tonight we’re again standing pat and seeing how this bounce plays out. Our cash position remains near 87%.

The market’s trends were looking pretty iffy until better-than-feared inflation data came out on Tuesday (PPI) and Wednesday (CPI).

Those data releases finally gave Treasuries a boost and knocked the 10-year yield down from last week’s level of 4.8%, which was the highest since November of 2023 (the 10-year yield hit 4.74% last April, which was close, but not quite as high as last week).

Individual stocks continue to move around based on earnings reports and, for the most part, things appear to be quite good. Many management teams aren’t yet sticking their necks out and issuing rosy guidance for 2020, and that’s causing a few dips here and there.

There’s no doubt things are looking a little better out there as many software, MedTech and other growth stocks retested their March lows late last week then turned north. The timing of that short-term reversal, coinciding with the end of the first quarter, most definitely has me feeling better about the state of things right now.

Even though stocks have been wobbly today the last week has been very constructive for our portfolio. As of mid-day today, our portfolio is up an average of 4% from last Thursday’s close, and only two positions are down (neither by more than 2%).

The market seems to be a bit complacent given the risks of the virus spreading rapidly in China and elsewhere but we need to remain a bit cautious. There is some suspicion that China is downplaying the numbers.

Small and large cap indices are up around 2.4% from Friday’s close and the portfolio is up almost 5%.

Chloe Lutts recommends Ecana Corp. (ECA) and Cheniere Energy Partners LP (CQP).

Cabot’s market timing disciplines give clear signals for when to trust the bull and how to get out of the way of the bear.

The earlier people retire, the sooner their cognitive functions begin to decline.

There has been a flurry of reverse stock splits of late. Are they good for investors? Traditionally no. But there are exceptions.

Between bad brokers and online scams, it can feel like there’s always someone coming for your money. But these tips (and red flags to look out for) can help you protect what’s yours.

Repligen (RGEN) reported Q2 results before the bell today that surpassed expectations and has the stock up nicely (6% at mid-day) and bucking the broader market weakness. Revenue was up 86% to $163 million, beating by nearly $19 million, while adjusted EPS of $0.79 rose by 88% and beat by $0.27. Management raised full-year guidance to a range of $625 million to $645 million (up 71% to 76%), well above consensus estimates of $586 million. Adjusted EPS guidance goes to $2.71 - $2.78, way above consensus of $1.71. Gross margins are up a lot, from 57.9% in the year ago quarter to 62% in Q2.

AI stocks have been the primary driver of the bull market, but the stage is set for other sectors to outperform. Here are three stocks I like now to limit your AI exposure.

The market was looking pretty good through last week. Then this week, with no meaningful progress on the debt ceiling, momentum has deteriorated.


Yesterday afternoon U.S. House Speaker McCarthy was on a roll, saying that things are going a little better, that he won’t put a bill on the floor that spends more than last year and that the President is realizing he has to spend less.



JPMorgan says they put the odds of no debt ceiling deal by early June at around 25% and rising.