Hot Picks: Turnarounds and failed deals drive stock opportunities

Event-driven equities may offer investors opportunities as company-specific catalysts create potential for outsized returns.

BNN Bloomberg spoke with Mike Piccolo, senior vice-president of equity research at Wedbush, about stocks tied to operational turnarounds, failed deal dislocations and major litigation outcomes.

Key Takeaways

• Event-driven strategies focus on catalysts such as mergers, restructurings and litigation that can unlock value.
• Management changes and AI-driven efficiencies can support turnaround stories and margin expansion.
• Failed deals can create valuation dislocations, offering potential entry points for investors.
• AI adoption presents both opportunity and risk, particularly for labour-intensive business models.
• Litigation outcomes can deliver asymmetric returns but come with timing, political and execution risks.

Read the full transcript below:

LINDSAY: Welcome back. It’s time now for Hot Picks, and today we are zeroing in on three event-driven equities. These are stocks facing unique catalysts that could unlock meaningful upside.

Our next guest has Cross Country Healthcare as his top pick for its potential long-term, tech-enabled transformation. Let’s get more perspective now from Mike Piccolo, senior vice-president of equity research at Wedbush. It’s good to have you join us. Thank you.

MIKE: Great to be on the show as well. Thank you for having me.

LINDSAY: Let’s get to that first pick of yours, Cross Country Healthcare. Why do you think there’s so much upside in this company?

MIKE: Great question. It starts with the thematic report I published when I initiated coverage on the company, which was with a neutral rating at the time. As analysts, we’re looking for dislocations in the market caused by a change in shareholder base.

What drove me to look at Cross Country Healthcare was its failed merger with Aya Healthcare last year at about $18 per share. The deal didn’t close due to FTC regulatory concerns, which pushed it past the merger drop-dead date, and both companies decided not to proceed.

That said, revenue had fallen off from pandemic highs. The company saw a big boom during the pandemic because it provides nurse and healthcare staffing for hospitals and clinics, and it has since expanded into premium sectors such as home care and senior housing.

What drives my pick is the change in shareholder base following the merger, combined with the return of co-founder Kevin Clark as CEO. Given his background in building technology companies, I think this labour-intensive business model can harness AI to improve operational efficiency, expand margins and enhance service offerings.

LINDSAY: Next up is TaskUs. This one’s interesting because you say a failed take-private creates a potential opportunity. Is that right?

MIKE: Yes, a similar thesis to Cross Country, but this deal failed due to lack of shareholder support rather than regulatory issues. Blackstone and management own the Class B shares with voting power, but the deal couldn’t get majority-of-minority approval.

Some shareholders publicly argued fair value was higher than the proposed offer. After the deal collapsed, the stock fell and is now trading at depressed multiples relative to its history and peers.

TaskUs is a business process outsourcing provider with segments in digital customer experience, content moderation and a growing AI services segment. I think the market is misunderstanding the AI impact — rather than being disrupted, the company could benefit from AI-driven growth, particularly in its AI services business.

They recently declared a special dividend, which goes ex-dividend tomorrow, so the stock may see near-term weakness. That could create a more attractive entry point, given we have an outperform rating and a $14 price target over 12 months.

LINDSAY: You mentioned AI headwinds tied to labour. Can you expand on the risks and any others investors should consider?

MIKE: There are risks, primarily around execution and AI implementation. The company has high customer concentration — one large social media client accounts for about 27 per cent of revenue.

If those large tech firms bring services in-house as they invest in AI, that could create pressure. That said, I incorporate those risks into my valuation through scenario analysis, including a bear case of $8 per share and a probability-weighted base case of $14.

LINDSAY: Let’s move on to your final pick, Burford Capital.

MIKE: This is more of a binary, event-driven situation. Burford is one of the largest litigation finance firms. It funds legal cases and uses data and legal expertise to assess outcomes.

It has a strong track record, with roughly 87 per cent return on invested capital and a 26 per cent internal rate of return.

The key catalyst is litigation related to Argentina’s YPF. There’s a large judgment in Burford’s favour, and while a full payout is unlikely, even a partial settlement could drive significant upside.

We have a $13 price target, factoring in timing and uncertainty. But compared with current levels, the risk-reward is asymmetric, with limited downside and potentially meaningful upside depending on the outcome.

LINDSAY: We’ll have to leave it there. Mike Piccolo, senior vice-president of equity research at Wedbush. Thanks so much for your time.

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This BNN Bloomberg summary and transcript of the March 25, 2026 interview with Mike Piccolo are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.