Synopses & Reviews
In the corporate world, "vulture" investors in distressed securities serve the same cleanup function as vultures do in the natural world: they deal with failing companies, digest bad debt, and mop up after bankruptcies.
Since this market's structural and legal complexities create greater inefficiencies than in other investment fields, it's a style of investing that can make money during both booms and busts. While recent economic carnage has created opportunities for vulture investors, more convoluted bankruptcies, conflicts of interest, and even government intervention have made this arena harder to negotiate.
Nobody understands this better than author and founder of Schultze Asset Management, George Schultze. During his successful career as a vulture investor, he's learned a number of lessons and developed an investment philosophy that has served him well. Now, in The Art of Vulture Investing, Schultze shares his valuable insights and experiences with you. Engaging and informative, this reliable guide offers a bird's-eye view into the opportunities and risks associated with vulture investing. And while it may not always be pretty, you'll see exactly why this process is necessary for our economic ecosystem.
Throughout the book, Schultze discusses what it takes to make it in the world of distressed securities. You'll discover how to research and pick the right companies in which to invest, swoop in on the "fulcrum security" of a failing company, wait patiently while others may panic, recognize when to get out of a losing position, and much more. Along the way, you'll also become familiar with the various investment options that reorganizations present at different stages of the process. And in order to put the concepts covered into a real-world context, Schultze recounts many of his own experiences, which include such high-profile bankruptcies as Tropicana Casinos and Chrysler Automotive.
By its very nature, investing in distressed companies can be a complex and risky business. But once the dust settles, these investments can yield extraordinary profits. The Art of Vulture Investing puts this discipline in perspective and shows you how to excel at this difficult, yet rewarding, endeavor.
Synopsis
George Schultze truly loves what he does as a major player in the distressed investing world. As the portfolio manager for Schultze Asset Management, he and his team have over $250 million in funds under management. They have a strong background in perfecting strategy by analzying the true value of distressed companies, and have been honing a successful approach to making money on financially troubled companies for years. Recently, George was thrust into the spotlight as one of nine companies criticized by President Obama as "speculators, holding out" on the Chrysler bailout terms, accused of ultimately causing Chrysler to file chapter 11. But the government's involvement in the Chrysler bailout sparked a debate about bankruptcy investing; were existing regulations adhered to or hopscotched because of political preferences? Were certain second-tier unsecured lenders to benefit from the government's involvement before secured private lenders? What do the terms of bailouts do to the rates at which security investors decide to lend money, and what type of companies they invest in? Here, George discusses distressed security investing theory & strategy while presenting current case studies in order to offer readers a look at how the playing field may have changed in recent years.
Synopsis
A detailed look at the discipline of modern distressed investingInvesting in distressed securities/financially troubled credits is an approach that contains both great risk and opportunity. Occurrences from the recent credit crisis have changed this playing field immensely, not so much in terms of actual laws being revised but in the government's larger role. What are the repercussions of the crisis and its bailouts on lending to financially troubled companies? Do the same approaches that have been used for over sixty years still hold true or have some of the rules changed? The Art of Vulture Investing will answer these, and many other, important questions.
An expert in the field distressed investing, author George Schultze understands the risks and opportunities of investing in financially troubled companies, especially in the wake of a shaken credit industry and sizeable government bailouts. Now, in The Art of Vulture Investing, he shares his extensive insights and expertise with you. Throughout this book, he skillfully discusses distressed security investing theory and strategy, while presenting current examples in order to reveal how the landscape has changed in recent years.
- Offers valuable information on post-financial crisis distressed security investing
- Examines the opportunities and dilemmas of the modern portfolio manager who invests in distressed securities
- Includes in-depth case studies of Chrysler and Tropicana
If you're looking to enhance your understanding of the distressed investing discipline, this book is the best place to start.
Synopsis
Praise for
The Art of Vulture Investing"Over the years, George Schultze has demonstrated considerable knowledge of distressed securities and value investing. He now shares his extensive overall experience in this very sector in a clear and understandable manner, which should be of considerable interest to any person interested in the subject."
Grant Stoddart, CEO, Sharp Performance USA, Inc.
"George's easy-to-read style compels the reader to learn more about the opportunities to invest in troubled companies. It's a good read for anyone interested in learning how to tackle the tough issues with a thoughtful and honest approach."
Ron S. Geffner, Partner, Sadis & Goldberg LLP
"Happy to see George has learned his lessons well."
Phil Smith, adjunct professor at Columbia Business School, Managing General Partner, Private Equity Partnership, and Vice Chairman of Spencer Trask & Co.
"This book offers a fascinating inside look into the specialized, and often misunderstood, world of distressed debt investing. The strategies and tactics that these investors use to create or realize value in distressed companies are memorably illustrated through one prominent investor's personal experiencesblow-by-blowin some of the most challenging and controversial restructurings of the past decade. This is not investing for the faint of heart."
Professor Stuart C. Gilson, Steven R. Fenster Professor of Business Administration, Harvard Business School and author of Creating Value Through Corporate Restructuring: Case Studies in Bankruptcies, Buyouts, and Breakups
"A great inside account showing that vulture investors don't feed on carcasses, but resurrect failing businesses. They allocate capital more efficiently and often save and create jobs. Vultures in nature don't add value; vulture investors like George Schultze do."
Charles E. F. Millard, Head of Pension Relations at Citigroup; former director, Pension Benefit Guaranty Corporation
Synopsis
A detailed and compelling look at distressed securities investing in today’s marketIn the corporate world, “vulture” investors in distressed securities serve the same cleanup function as vultures do in the natural world: they deal with failing companies, digest bad debt, and mop up after bankruptcies. Since this market’s structural and legal complexities create greater inefficiencies than in other investment fields, it’s a style of investing that can make money during both booms and busts. While recent economic carnage has made opportunities for vulture investors, more convoluted bankruptcies, conflicts of interest, and even government intervention have made this arena harder to negotiate.
Nobody understands this better than author George Schultze, founder of Schultze Asset Management. During his successful career as a vulture investor, he’s learned a number of lessons and developed an investment philosophy that has served him well. Now, in The Art of Vulture Investing, Schultze shares his valuable insights and experiences with you. Engaging and informative, this reliable guide offers a bird’s-eye into the opportunities and risks associated with vulture investing. And while it may not always be pretty, you’ll see exactly why this process is necessary for our economic ecosystem.
Throughout this book, Schultze explains the theory and strategy of vulture investing in clear and lively prose, illustrating each concept with examples from his own varied experience that show how the landscape has changed in recent years.
- Offers valuable information on distressed securities investing since the 2007-2009 financial crisis
- Examines the opportunities and dilemmas for modern vulture investors
- Includes in-depth case studies of high-profile bankruptcies, including those of Chrysler Automotive and Tropicana Casinos and Resorts
By its very nature, investing in distressed companies can be a complicated and risky business. But once the dust settles, these investments can yield extraordinary profits. The Art of Vulture Investing puts this discipline in perspective and shows you how to excel at this difficult, yet rewarding, endeavor.
About the Author
GEORGE J. SCHULTZE is a highly regarded authority on distressed securities investing who has been active in this field since 1994. In 1998, he founded Schultze Asset Management, LLC to offer global clients an opportunity to co-invest through a variety of investment vehicles. He is a frequentspeaker at investment conferences and has been interviewed by journalists from Bloomberg, Fox, CNBC, TheStreet.com, CNN, the
Wall Street Journal, the Dow Jones
Daily Bankruptcy Review, and many others. He is a director of the Hedge Fund Association and is also active in philanthropic activities through the Schultze Foundation. Mr. Schultze earned MBA and JD degrees from Columbia University.
JANET LEWIS is a writer, editor, and marketing/PR consultant with more than twenty years of experiencecovering all aspects of finance. Ms. Lewis has written for publications in New York, London, and Paris including Fortune, the Banker, Global Finance, the European, Dealmaker, FX Week, where she served as European editor, and Institutional Investor, where she was associate editor.
Table of Contents
Foreword ix
Acknowledgments xi
Preface xiii
CHAPTER 1 Emerging from the Egg 1
CHAPTER 2 Learning to Scavenge 17
CHAPTER 3 Looking for Prey 39
CHAPTER 4 Waiting On a Limb 63
CHAPTER 5 Swooping In: Tropicana 73
CHAPTER 6 Fighting Over the Carcass: Chrysler 95
CHAPTER 7 Digesting the Remains 115
CHAPTER 8 A Vulture’s Philosophy 131
APPENDIX 1 Net Operating Loss Carry Forwards 139
APPENDIX 2 Copy of Continued Objection by Ad Hoc Committee of Washington Group Class 7 Claim Holders 141
APPENDIX 3 Letter to Washington Group’s Board of Directors 153
APPENDIX 4 Shareholder Complaint against Winn-Dixie Board et al. 157
APPENDIX 5 Objection by Schultze Asset Management to Owens Corning Disclosure Statement
About the Authors 185
Index 189