There are always companies in the market that look terrible but are likely to get back on the right track. The first instinct for the regular investor is often to invest in a financially distressed company's shares, but, as we'll learn in this article, the debt (bonds) of these firms is often a much more attractive investment. And although buying up large chunks of debt can cost millions of dollars, there are still ways for little guys to cash in too.
Buying Into Weak Companies Distressed debt investing entails buying the bonds of firms that have already filed for bankruptcy or are likely to do so. Companies that have taken on too much debt are often prime targets. The aim is to become a major creditor of the company by purchasing its bonds at a low price. This gives the buyer considerable power during either a reorganization or liquidation of the company, allowing the buyer to have a large say in what happens to the company. Read Article: http://www.investopedia.com/articles/stocks/07/distressed-debt.asp Comments are closed.
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AuthorJoshua Nahas Archives
May 2017
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