Details

Distress Investing

Principles and Technique
Wiley Finance, Band 397 1. Aufl.

von: Martin J. Whitman, Fernando Diz
47,99 €
Verlag:	Wiley
Format:	EPUB
Veröffentl.:	22.04.2009
ISBN/EAN:	9780470488430
Sprache:	englisch
Anzahl Seiten:	272

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Titelbeschreibung

Financial innovation, new laws and regulations, and the financial meltdown of 2007–2008 are just a few of the forces that have shaped, and continue to shape, today's distress investment environment. Combine this with the fact that the discipline of distress investing doesn't always follow what conventional wisdom says, and you can see why it is one of the most challenging areas in finance. Nobody understands this better than Martin Whitman—the legendary founder of Third Avenue Management LLC and a pioneer in the field of distressed markets—and leading academic Dr. Fernando Diz of Syracuse University. That's why they decided to write Distress Investing. As an outgrowth of annual distress and value investing seminars the two have taught together at Syracuse University's Martin J. Whitman School of Management, this reliable resource will help you gain a better understanding of the essential principles and techniques associated with distress investing and show you how to effectively apply them in the real world. Divided into four comprehensive parts—the General Landscape of Distress Investing, Restructuring Troubled Issuers, the Investment Process, and Cases and Implications for Public Policy—this book comprehensively covers the practice of buy-and-hold investing in distressed credits, whether it be performing loans or the reinstated issues of a reorganized issuer. From the recent changes to U.S. bankruptcy code and creditor rights to cash bailouts, you'll quickly learn how to analyze distressed situations such as pricing issues, arbitrage opportunities, tax disadvantages, and the reorganization of funding plans. Along the way, case studies of both large and small distress investing deals—from Kmart to Home Products International—will give you a better perspective of the business. Critical topics addressed throughout these pages include: <ul> <li>Chapter 11 bankruptcy and why it's not considered an ending, but rather a beginning when it comes to distress investing</li> <li>The "Five Basic Truths" of distress investing</li> <li>The difficulty of due diligence for distressed issues</li> <li>Distress investing risks—from reorganization risk to risk associated with the alteration of priority of payments in bankruptcy</li> <li>Valuing companies by both going concern as well as their resource conversion attributes</li> </ul> In today's turbulent economic environment, distress investing presents some enticing opportunities. Put yourself in a better position to excel at this endeavor with Distress Investing as your guide.

Inhaltsverzeichnis

Foreword xiii Preface xv Acknowledgments xxii Part One The General Landscape Of Distress Investing Chapter 1 The Changed Environment 3 Trends in Corporate Debt Growth and Leverage before the Financial Meltdown of 2007–2008 4 Junk Bonds and the Levering-Up Period 6 The Syndicated Loan Market and Leveraged Loans 12 Financial Meltdown of 2007–2008 16 Principal Provisions of the 2005 Bankruptcy Act as They Affect Chapter 11 Reorganizations of Businesses 22 Chapter 2 The Theoretical Underpinning 27 What Market? 27 Toward a General Theory of Market Efficiency 29 External Forces Influencing Markets Explained 32 What Risk? 34 Capital Structure and Credit Risk 38 Valuation 39 The Company as a Stand-Alone Entity 41 Control and Its Vital Importance 42 Chapter 3 The Causes of Financial Distress 43 Lack of Access to Capital Markets 44 Deterioration of Operating Performance 46 Deterioration of GAAP Performance 48 Large Off-Balance-Sheet Contingent Liabilities 51 Chapter 4 Deal Expenses and Who Bears Them 53 Attorneys and Financial Advisers’ Compensation Structure and the Distribution of the Fee Pie 54 Time in Chapter 11 and Number of Legal Firms Retained 66 Determinants of Legal Fees and Expenses 67 Determinants of Financial Advisers’ Fees and Expenses 68 Can Professional Costs Be Excessive? 68 Appendix 69 Chapter 5 Other Important Issues 71 Management Compensation and Entrenchment 71 Tax and Political Disadvantages 73 Chapter 6 The Five Basic Truths of Distress Investing 77 Truth 1: No One Can Take Away a Corporate Creditor’s Right to a Money Payment Outside of Chapter 11 or Chapter 7 78 Truth 2: Chapter 11 Rules Influence All Reorganizations 82 Truth 3: Substantive Characteristics of Securities 84 Truth 4: Restructurings Are Costly for Creditors 86 Truth 5: Creditors Have Only Contractual Rights 87 Part Two Restructuring Troubled Issuers Chapter 7 Voluntary Exchanges 91 Problems with Voluntary Exchanges 92 The Holdout Problem Illustrated 93 Making a Voluntary Exchange Work 94 Tax Disadvantages of a Voluntary Exchange versus Chapter 11 Reorganization 95 Chapter 8 A Brief Review of Chapter 11 99 Liquidations and Reorganizations 100 Starting a Case: Voluntary versus Involuntary Petitions 100 Forum Shopping 101 Parties in a Chapter 11 Case 101 Administration of a Chapter 11 Case 103 The Chapter 11 Plan 109 Chapter 9 The Workout Process 117 Parties and Their Differing Needs and Desires 117 Types of Chapter 11 Cases 120 Leverage Factors in Chapter 11 125 Part Three The Investment Process Chapter 10 How to Analyze: Valuation 133 Strict Going Concern Valuation 134 Resource Conversion Valuation 146 Liquidation Valuations 148 Chapter 11 Due Diligence for Distressed Issues 151 Chapter 12 Distress Investing Risks 157 Risks Associated with the Alteration of Priorities 158 Risks Associated with Collateral or Enterprise Valuation 165 Reorganization Risks 168 Other Risks 168 Chapter 13 Form of Consideration Versus Amount Of Consideration 171 Part Four Cases and Implications for Public Policy Chapter 14 Brief Case Studies of Distressed Securities, 2008–2009 177 Performing Loans Likely to Remain Performing Loans 178 Small Cases 182 Large Cases 184 Capital Infusions into Troubled Companies 184 Chapter 15 A Small Case : Home Products International 187 The Early Years 188 Growth by Acquisitions 189 Retail Industry Woes 192 The Fight for Control 195 Amendment of Indenture and Event of Default 196 The Decision: Prepackaged Chapter 11 197 Treatment of Impaired Classes under the Plan 198 Financial Means for Implementation of the Plan 199 Going-Concern and Liquidation Valuations 199 Chapter 16 A Large Reorganization Case: Kmart Corporation 203 Landlords and Unexpired Leases 204 Vendors and Critical Vendor Motions 206 Management and KERPs Pre-2005 BAPCPA 208 Fraudulent Transfers 209 Subsidiary Guarantees and Substantive Consolidation 210 Chapter 11 Committees and Out-of-Control Professional Costs 211 Blocking Positions 211 Buying Claims in Chapter 11 214 Debtor-in-Possession Financing 215 Kmart’s Plan of Reorganization and Plan Investors 218 Investment Performance 222 Chapter 17 An Ideal Restructuring System 225 Feasibility and Cash Bailouts 226 Good Enough Rather Than Ideal 226 Highly Beneficial Elements in the U.S. Restructuring System 226 Goals of an Ideal Restructuring System 228 Suggested Reforms 229 Notes 233 About the Authors 238 Index 239

Rezension

“…this is the best book that I have read since The Black Swan…do yourself a favor and pick up a copy; you'd be crazy not to.” (SeekingAlpha.com, June 11, 2009)

Autorenportrait

MARTIN J. WHITMAN is Chairman and co-CIO of Third Avenue Management LLC. He has taught courses in value investing and distressed investing for the past thirty years at the Schools of Management at both Syracuse University and Yale University. Whitman is also the author of the Wiley titles Value Investing and The Aggressive Conservative Investor. FERNANDO DIZ is the Martin J. Whitman Associate Professor of Finance and Director of the Ballentine Investment Institute at Syracuse University. His research specialties are in the areas of trading, derivative securities, and value and distress investing. Diz has written for the Journal of Futures Markets, the Review of Financial Studies, and the Journal of Alternative Investments.