The Vulture Investors: The Winners and Losers of the Great American Bankruptcy Feeding Frenzy Paperback – 31 Jul 1993
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Just as night follows day, a fall inevitably trails a stock market rise. As the Internet share frenzy reaches its nadir and bankruptcies loom, the vultures start circling. Hilary Rosenberg's delightful Vulture Investors details the work of investors who pick through the carcasses of busted companies. She describes in colourful detail the efforts of Michael Price buying defaulted bonds of Storage Technology Corporation in the mid-1980s. We learn about the early training of junk bond-corporate raider Michael Milken, trading in bankrupt and near-bankrupt companies.
This is an updated edition of a book that Rosenberg first published in 1992. She worked for Institutional Investor, the American Vogue magazine for corporate financiers. She skilfully imbues what is basically a dull and sad process into tales of pitched battles between financiers and investors, commenting, "Vultures are a rare breed of investor. They are willing to fly headlong against a blizzard of prevailing opinion, betting that a company on its knees will once again stand up and resume walking. In some cases, they bet that the company will be worth much more dead than alive, and that they will profit when it is sold off in pieces."
Vulture Investors describes many bankruptcies and the processes by which investors have profited. We learn about the saga of the Public Service Company of New Hampshire, which had unfortunately decided to build the Seabrook Nuclear plant just as the tide of public opinion was turning in the early 1980s. Drexel Burnham, the junk-bond specialist, had been called in to raise $150 million in capital to keep the utility ticking along. Rosenberg says that "vulture investor Marty Whitman had concluded that the deal was not viable. It was a ridiculous attempt by Drexel to stave off the inevitable. The $150 million offering, said the veteran vulture in his gritty voice, "was like spitting in the ocean. When the placement memo landed on his desk, it was like a green light flashing, 'Go invest'". Readers will learn why.
The book does not offer insight as to where the next arena for vulture investing will occur, and is more useful as an interesting read about characters in the US, and the tricks, techniques and negotiating tactics that worked well in the last decade, but nevertheless, for that alone, it is highly recommended. --Bruce McWilliams --This text refers to the Hardcover edition.
"A lively account of the hardy band of investors who look for-and find-gold in capitalism's junk pile. Rosenberg not only tells their stories with captivating relish but weighs the overall economic impact of their exploits. This book is a valuable introduction to 1990s-style deal-making." - Chris Welles, Senior Editor, Business Week -- Chris Welles, Senior Editor, Business Week
"In a tour de force of punchy business writing, Rosenberg dissects a little-known but increasingly common high-stakes financial game: preying on companies in distress. . . . The author relates these intricate, suspenseful narratives in a clear, lively style that always instructs and often amuses." - Publishers Weekly -- Publishers Weekly
"Reads like a good suspense novel." - Library Journal -- Library Journal --This text refers to the Hardcover edition.
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Most Helpful Customer Reviews on Amazon.com (beta)
The book went into great detail about the hierarchy of security claims and how they work in bankruptcy. The examples showed how the investor classes work with and against each other in bankruptcy and the roles the b/k judge and attorneys played. With many different narratives the reader is able to see different outcomes and the extreme risks and rewards involved in this type investing.
The book's main focus was on the personalities involved in buying distressed debt and then trying to influence the b/k process mainly through the courts but sometimes in prepackaged b/ks.
In summary, I learned a lot and enjoyed the stories also. The only caveat I would have is that the book was originally written in the early 90s so there are not new examples although the author did give summary updates on the companies and investors up through 1998.
But, the book doesn't cover these topics in mere textbook fashion. Rather, it introduces us to some of the most famous vulture investors of all time and provides exciting narratives of their significant investment successes and failures. The cast of characters is fascinating. One ends up with a very good feel for the type of personality needed to work in this field: financial/legal wizard who combines the ferocity and tenacity of a wolverine with the haggling skills of a hat merchant from the garment district.
One of the most famous of the vulture investors is Marty Whitman, whose book "Value Investing: A Balanced Approach" forms an invaluable companion text to this book. "Value Investing" provides the theoretical underpinnings; "Vulture Investors" shows the theories in action.
The author does a great job of taking a very, very complex business and breaking it down so that most readers can understand the world of "Vulture Investors".
The author engages the reader in a story book fashion with actual bankruptcy stories, the cast of characters, investment philosophies/strategies and lessons to be learned.
The author also sprinkles in bankruptcy laws and procedures for those who are not as conversant in the field.
Overall, I highly recommend this book to anyone who is interested in profiting from distressed companies.