Whether your stock is trading below $5, or your stock is just stuck from a valuation perspective, the Rubis Five-Step Turnaround Cycle can help fix the problem.
The Rubis Five-Step Turnaround Cycle:
1. Extreme Change
2. Develop a 3-to-5-Year Plan
3. Hold an Analyst Day
4. Execute on the Catalyst Pathway
5. Continuously Refresh the Catalyst Pathway
Any turnaround starts with an extreme change response to the crisis at hand.
There are three obvious extreme change responses:
1. Executive Team Change: One Member or Many Members
2. Change the Company Make Up: Asset Sale or Asset Divestiture
3. Settlement: End Whatever Crisis Exists
The extreme change response is necessary to illustrate to investors that your respect the pain felt over capital impairment. Remember the pain will linger for a long period of time.
Next, Develop a 3-to-5-Year Plan to help investors re-engage with the company.
There are three critical components of the 3-to-5-Year Plan:
1. Updated Strategy
2. Catalyst Pathway: More and Longer = Best
3. Long-Term Financial Targets
Once the 3-to-5-Year Plan is developed the goal needs to be to present that plan at an Analyst Day.
An Analyst Day signals a couple of things, especially for a stock under $5:
1. Extreme Confidence from Management
2. The Stock is Undervalued
3. Extremely High Probability Catalysts Exist to Re-Rate Valuation Higher
After the Analyst Day, the company needs to relentlessly execute on the catalyst pathway presented:
1. Execute: Good and bad, just explain what happened and how you are adjusting
2. Execution = Track Record
3. Track Record repairs credibility, brings investors back, and keeps them engaged
Lastly, ensure you continuously update the catalyst pathway for investors:
1. Refresh: As you move through your plan, refresh new catalysts as you pass each quarter and each year of the plan
2. Extending the catalyst pathway will keep investors engaged longer
Executing on the turnaround requires extreme focus, copious amounts of hard work, and extreme patience.
Even with perfect execution, the best outcome may be M&A at a small premium.
Comments