For portfolio managers seeking high-impact turnaround idea. 
This strategy for alpha generation unearths companies exhibiting significant latent potential for future value creation. Portfolio managers seeking hidden gems may find exceptional returns in these stocks, with low current value creation trends but with immense potential to turnaround their fortunes and deliver superior returns through incremental value creation.

The Spirited-Alpha Turnaround Ideas Strategy

These companies exhibit low 1-year I-EVA rates, indicating weak incremental value creation. The current near-term rate of value creation is unimportant; instead, the focus is on the outlook for I-EVA, which is expected to show a strong forecast acceleration. As a Spirited-Alpha strategy, stocks are also chosen for their lengthy implied competitive advantage period, requiring investors to tolerate high-duration risks. In other words, a big chunk of the stock’s valuation is contingent on future cash flow generation. Additionally, this strategy shows indifference towards capital allocation decisions, with a tolerance for aggressive and defensive strategies. However, it seeks out stocks with moderate or low embedded expectations to strike a balance between the price paid and the potential upside to returns.

The Spirited-Alpha Turnaround Ideas Strategy stock selection criteria:

• Low Current Value Creation (I-EVA rate):
  Low, or even negative, rate of current value creation
• Strong Forecast Incremental Value Creation (I-EVA):
  The analysis identifies companies with significant potential for accelerating economic profits and earnings.
• Moderate-Strong Implied Competitive Advantage (I-CAP):
  Companies enjoy a lengthy competitive advantage, indicating confidence in future profitability, and tolerance for duration risk
• Moderate Embedded Expectations:
  Stocks with moderate or low embedded expectations, indicating the absence of exuberance in share prices

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