1 CabotWealth.com

2 Contrarian Stocks for a Momentum WorldBruce Kaser, Chief Analyst Cabot Turnaround Letter andCabot Undervalued Stocks AdvisorThursday, June 17, 20212:00pm EDT

2 CabotWealth.com

• Delivers profitable, contrarian investment ideas to our subscribers• Backed by rigorous, institutional-quality research• Unique in industry:

o Founded by George Putnam, IIIo Published for over 30 yearso Acquired by Cabot Wealth in 2020

• Loyal following of private and professional investors• Has produced strong returns :

o Short term: 159.6% over past 12 months1

o Top Five for 2021: 87.2%2

o Long term: 11.4% over past 20 years, compared to 8.4% for the S&P 5001

Introduction to the Cabot Turnaround Letter

1. Return data as of May 31, 2021 for stocks on the Recommended List, as compiled by Mark Hulbert and Hulbert Ratings (www.hulbertratings.com). Returns for periods greater than one year are annualized. The S&P 500 Index is a registered trademark of SP Global.

2. Each December, we pick our five favorite ideas for the year ahead and distribute the list to selected media outlets. Return data is the average price-only return for the “Top Five Stocks for 2021” from the December 18, 2020 selection date through June 10, 2021.Note: Past performance is no guarantee of future returns.

3 CabotWealth.com

Cabot Turnaround Letter

Ø Monthly issuesØ Weekly podcastsØ Regular earnings and news updatesØ The Catalyst ReportØ Holding period is generally 2-3 yearsØ Generally higher risk/higher return stocks with

50%+ upside potentialØ 12 Recommended stocks/year, plus 100+

additional actionable ideasØ All market caps and sectors, primarily domestic

stocks

Two contrarian/value investing advisory servicesCabot Undervalued Stocks Advisory

Ø Weekly issues

Ø Regular earnings and news updates

Ø Holding period is generally 1-2 yearsØ Moderately high risk/return stocks with 25-50%

upside potentialØ Approximately 8-12 new stock picks/year

Ø All sectors, primarily large cap and mid cap domestic stocks

Cabot Wealth’s Mission:To be a trusted independent source of advice for individuals striving to take control of their investments.

4 CabotWealth.com

Bruce Kaser, chief analyst:

25+ years experience as fund manager using a contrarian approach• Loomis Sayles, Royal Bank of Canada• Former principal of $3 billion privately-held fund management company• Founder of long-only investment fund• Led three successful investment fund turnarounds• Currently full-time investor overseeing family office

Who is your investing partner?

5 CabotWealth.com

The contrarian mindset

“… Mr. Market is there to serve you, not to guide you. It is his pocketbook, not his wisdom, that you will find useful. If he shows up some day in a particularly foolish mood, you are free to ignore him or to take advantage of him, but it will be disastrous if you fall under his influence.”

- Berkshire Hathaway Shareholder Letter, 1987

6 CabotWealth.com

Value investing…from Seth Klarman

“…investors who take advantage of Mr. Market's periodic irrationality, by contrast, have a good chance of enjoying long-

term investment success."

“Value investing is at its core the marriage of a contrarian streak and a calculator.”

Seth A. Klarman is the founder and head of The Baupost Group, a $30 billion long-only investment fund with one of the most successful value/contrarian investment records in the industry.

7 CabotWealth.com

• They don’t all go up forever• Once you make a good purchase, it is a lot less work and a lot less stress• Intangible value of being an owner of real businesses• It’s how nearly all of the great investing fortunes have been made… they

must be doing something right…

Why bother with a contrarian approach when everything is going up?

8 CabotWealth.com

Does contrarian investing still work?

• Makes investors uncomfortable• Wall Street waits until the story regains “respectability”• Too nuanced for quantitative strategies• Holding period (2-3 years) is well beyond most investors’ horizon• Most investors skeptical about return potentials of 50+%• “Too much work” to find the good names

Absolutely...because most investors don’t want to invest this way

9 CabotWealth.com

How can you find worthwhile contrarian stocks?

• Look for out-of-favor stocks…• with real value…• undergoing significant positive change…• that have the potential for returns (much) greater than 50%

10 CabotWealth.com

Out-of-favor stocks

(about 10-20% of the investable universe)

… and investors stay away!

These stocks are unpopularand uncomfortable to own.

• Revenues aren’t growing• Margins are shrinking• Acquisitions have failed• Tainted by bankruptcy• Temporary but unnerving problems• Uninspiring near-term prospects• The narrative is frequently awful

Contrarian investing focuses on unpopular stocks

Contrarian stocks have something wrong with them…

11 CabotWealth.com

Tools we use to find out-of-favor stocks

1. Stock screens – industry/sector/market laggards, low statistical valuations, other one-off traits.

2. Stock charts – look for the laggards.3. Selected data services to troll through aggregated regulatory filings.4. A lot of reading – primarily credible financial and news media and company-

provided documents. We don’t read social media.

12 CabotWealth.com

A few stocks will recover if they have the right catalyst…

… one that is powerful enough to reverse a company’s fortunes and restore investor confidence

ü New managementü Credible shareholder exerting pressureü Spin-off transactionü Imminent cyclical upturnü Temporary legal/product problemsü Fresh start by emerging from bankruptcy

Catalyst

(average 30-50 each month)

A weak stock price is only half of the strategy

13 CabotWealth.com

Tools we use to find catalysts

1. Automated web retrieval2. Credible financial and news media3. Stock data services

14 CabotWealth.com

Out-of-favor stocks

(about 10-20% of the investable universe)

The opportunity is at the intersection

Catalyst

(average 30-50 each month)

Where we look for the opportunity

15 CabotWealth.com

• Fundamentalso Relevance/stability – secular and cyclical revenue and margin traitso Balance sheet/free cash flow – ability to endure and fund the turnaroundo Management – right mindset, ability to think, lead, produce results

• Valuationo Undervalued “as it sits”o Meaningfully undervalued on post-turnaround basiso Primary tools: EV/EBITDA, price/earnings, price/TBV

• Relative Strengtho Identifying the “right time” to start a position

Up-front, in-depth research is critical to success

16 CabotWealth.com

• Longer-term mindseto Think like an owner: buying the entire company and can’t sell for 2-3 yearso Ignore the noise

• Set a price targeto Based on post-turnaround scenarioo Helps monitor the company’s progresso Anchors resolve when the stock price goes downo Helps time the exit

• Sell wheno Stock approaches or reaches price targeto When fundamental deterioration permanently impairs the company’s valueo We do not sell merely because the stock price has gone down

Key concepts with our approach

17 CabotWealth.com

Recent closed-out recommendations

Table is from June 2021 issue of Cabot Turnaround Letter. A “*” indicates a mid-month sale. Total return includes price changes and dividends. Prices and returns are adjusted for stock splits and mergers.

18 CabotWealth.com

1. Turnarounds don’t always work2. Losses from unsuccessful turnarounds can be high3. Diversification is critical

Common turnaround investing mistakes

ý Misreading the depth of the operational problems or management’s capabilities

ý Not paying enough attention to the debtý Not having a handle on the end-game and

mathematics of the opportunityý Not using catalystsý Buying or selling too early or too lateý Not being patient enough to hold on

How we help you avoid common mistakes

How we help you avoid these

ü Our 25+ years of experience plus active learning and development

ü We critically assess the up-front and on-going risksü The end-game is a key input of our decision-

making, backed by rigorous mathematical analysisü We provide you with the monthly Catalyst Reportü We provide specific buy and sell pointsü We provide you with on-going updates and relevant

analysis to keep you informed and build your patience

19 CabotWealth.com

Source: S&P Capital IQ

Ironwood Pharmaceuticals (IRWD)

Narrative• Failed pharmaceutical company• Patent expirations start in 2026• No products in pipeline• History of unprofitability

• Specialty pharmaceutical company• $1.9 billion market cap

Initiate BUY @ 12.02

(Dec 18, 2020)-22%

S&P500:+230%

20 CabotWealth.com

• Linzess franchise is a steady revenue producer with growing volumes that offset its slow per-unit price decline

• Linzess is marketed by pharmaceutical giant AbbVie• Profits are climbing as Ironwood removes layers of unproductive expenses – estimated

2021 profits of $170 million.• Respected activist investor Alex Denner, who now holds a board seat, is exerting his

influence, including ousting the CEO and CFO and slashing spending.• Company is generating huge free cash flow which is accumulating on the balance sheet.

Cash now exceeds total debt.• Ironwood’s shares are undervalued – the 9.9x EV/EBITDA multiple doesn’t adequately

capture the discount. We believe it is worth $19/share (+67%)

Ironwood Pharmaceuticals: Our view

21 CabotWealth.com

Source: S&P Capital IQ

Nokia Corporation (NOK)• Major telecom equipment producer• $31 billion market cap• Based in Finland

NOK: 7-year laggard

Narrative• Weak #3 or #4 in 5G technology• Losing share to Samsung, Huawei • Products are uncompetitive• Pricing and profit margin problems• Suspended dividend in 2019

-24%

S&P500:+120%

22 CabotWealth.com

• New, capable CEO (March 2020) has acknowledged Nokia’s core problems and is getting Nokia back in the 5G game

• Sales have returned to growth (+9% in first quarter1)• Tightened focus on by-division competitiveness and financial results• Better leadership will drive wider profit margins• Potential duopoly with Ericsson?• Generates free cash flow: +€1.2 billion in first quarter• Sturdy balance sheet: €8.8 billion in cash > €5.2 billion in debt• Stock is undervalued – we believe it is worth $12/share

NOK: Our view

1. Net of currency changes.

23 CabotWealth.com

Patience to wait 2-3 years

(ignore the noise)

Be picky: Choose the 0.5%

Know thevaluation

Know the management

… and diversify

Keys to successful turnaround investing

24 CabotWealth.com

“Successful investing is having everyone agree with you… later”- Jim Grant, Editor, Grant’s Interest Rate Observer

In closing

25 CabotWealth.com

Right now there are great out-of-favor stocks to buy for those who are in the know. Let turnaround investing expert Bruce Kaser do all the work to pinpoint the companies poised for a big turnaround. Don’t miss out and subscribe today!

ü Monthly Issues featuring new investing ideas and stock recommendations

ü Weekly Podcast and Note providing recommendation updates and market commentary

ü Special Bulletins alerting you to changes in ratings

ü Exclusive Access to the Catalyst Report

ü 24/7 online access to our exclusive subscriber website and analyst archives

ü Direct private access to Chief Analyst Bruce Kaser for answers to your investing questions

Limited Offer so please Act NowCabotWealth.com/webinarspecial

Special Webinar Deal: $90 for 90 Days

26 CabotWealth.com

You may submit questions using the chat box.

Questions

Upcoming Events[FREE Webinar] How Government Spending Can Turn Into Investment GainsNancy Zambell, Editor-in-Chief, Financial Freedom Federation magazineThursday, July 22, 2021 / 2:00 PM ETSign up now at CabotWealth.com/webinars

Smarter Investing, Greater Profits Conference 2021Includes Cabot Wealth Summit and Financial Freedom Federation Forum Streaming Live Tuesday - Thursday, August 17-19, 2021More information or to register: CabotWealth.com/summit

27 CabotWealth.com

Bruce KaserChief AnalystEmail: Support@CabotWealth.comPhone: 800-326-8826

Contact

Special Webinar $90 for 90 Days Introductory Offer

Limited Offer so please act now. CabotWealth.com/webinarspecial