Kodak's new strategy comes into sharper focus

By Ironwood Investment Management

The Ironwood Smidcap Value Investment portfolio had a positive return of 0.45% in the March and appreciated 2.27% during the first quarter. In March, the portfolio's consumer discretionary stocks positively impacted performance while energy and technology stocks detracted from the month's gain.

Some of the better performing stocks were Big Lots (BIG), Brocade Communications Systems (BRCD), and Calgon Carbon (CCC). The managements of these three companies are in various stages of executing on the transition strategy that we identified as a potential catalyst for stock price appreciation when we initiated our positions in the stock.

Here's an update on portfolio positions we initiated in March.

Eastman Kodak Company (KODK) emerged from Chapter 11 in September, 2013, as a simpler, more focused company with a solid balance sheet, led by the capable new CEO Jeff Clarke. Most of its iconic brands (including consumer films and document copying) along with a wide range of other operations have been divested.

The new Kodak's primary businesses are commercial imaging, digital printing, and packaging, which all have attractive growth prospects. Other retained operations with less attractive growth potential, including the consumer printer and motion picture film businesses, are being managed for cash flow.

The balance sheet holds over $800 million in cash, which exceeds its debt. CEO Clarke has considerable and successful experience leading technology-related companies, and has outlined plans to improve the company's growth and margin profile. We believe the stock is attractively valued and, as Clarke executes on his strategy and drives increased profitability going forward, the stock will warrant a higher valuation.

DISCLAIMER: The investments discussed are held in client accounts as of March 31, 2013. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable. Past performance is no guarantee of future results.

Covestor Ltd. is a registered investment advisor. Covestor licenses investment strategies from its Model Managers to establish investment models. The commentary here is provided as general and impersonal information and should not be construed as recommendations or advice. Information from Model Managers and third-party sources deemed to be reliable but not guaranteed. Past performance is no guarantee of future results. Transaction histories for Covestor models available upon request. Additional important disclosures available at http://site.covestor.com/help/disclosures. For information about Covestor and its services, go to http://covestor.com or contact Covestor Client Services at (866) 825-3005, x703.

Ironwood Investment Management

Ironwood Investment Management

Ironwood Investment Management is an employee-owned investment management firm based in Boston that formed in 1997. It invests in undervalued

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