Rockwood Strategic: How Smart Money Targets Turnarounds

Many investors aim to invest like ‘smart money’, institutional investors who spend their time analysing stocks and deploying millions into their portfolios. Research shows it is possible to outperform the market by piggybacking their moves. For instance, shares often rise when institutional investors take high-conviction positions in a company.
At the same time, blindly copying smart money can feel like copying someone else’s homework. There is a better approach. Understand smart money techniques and apply them as part of your own skillset. As the saying goes: “Give a man a fish, and you feed him for a day; teach a man to fish, and you feed him for life.”
With that in mind, I’ve analysed trades made by Rockwood Strategic, an investment trust focused on turnaround opportunities. Studying their trades reveals various qualitative and quantitative rules - practical criteria that can be used independently, so that we’re not just imitating smart-money investors. Instead, we can use smart money trades as timing signals within our own framework of analysis.
Who are Rockwood Strategic?
Let’s start by understanding who Rockwood Strategic are.

Their strategy targets cheap turnarounds - i.e. ‘undervalued’ companies likely to benefit from operational, strategic or management changes.
Their portfolio stays concentrated in around 25 stocks,...