Investing for Survival
12
things I learned from David Tepper: #4
4. “We invest in a lot of bonds
and preferred (stock), which we can convert to equity. It not as risky as
people make it out to be.”
When you make an
investment in distressed debt your ownership interest can (under certain
circumstances) convert into equity ownership, which gives you certain control
rights that can be helpful in generating the return you desire. People who
understand areas like bankruptcy and finance can do things like determine what
is likely to be the “fulcrum security” which will convert into sufficient equity to exert some
measure of control when the business restructures via a plan of reorganization.
This sort of activity combines investing with the profession of distressed
investing/bankruptcy. Distressed investing is not an activity where amateurs
and people learning on-the-job experience a positive result. That David Tepper
can do it does not mean that you can do it.
Bonus:
If you don’t sell high, you can’t buy low (medium):
http://streettalklive.com/index.php/blog.html?id=2765
No comments:
Post a Comment