Turnaround situations have a reputation for delivering spectacular returns, if and when the company can actually turn things around. Once a company has lost its way, it is very difficult to regain market share or become profitable even if new management is at the helm. We discussed this briefly in a Twitter thread after an insider purchase at General Electric (GE) by Larry Culp. Despite his excellent management of Danaher (DHR) from 2000 to 2014, Culp has had a hard time turning around a behemoth like GE in the nearly 3.5 years since he took the top job at GE.
When reviewing the list of stocks that made the list for our Buyback Wednesdays article this week, I was struck by the fact that the top three were all turnaround stories. Genworth Financial (GNW) went through a grueling four and a half year period where China Oceanwide attempted to acquire the company and the acquisition finally failed in April 2021. The acquisition was originally announced in October 2016. Despite receiving all necessary U.S. and China regulatory approvals and extending the deal 17 times, Genworth finally pulled out of the deal when China Oceanwide had trouble financing the deal during the pandemic.