Opportunity In Leveraged Companies

Date Added: Oct 2009
Format: PDF

The fundamental and financial opportunities inherent in leveraged companies can provide strong upside potential for investments across their capital structures. Leverage tends to accelerate business changes at a company, potentially increasing returns on equity. Leverage also creates complexity, which makes it more likely that securities of these companies - common and preferred equity, high-yield bonds, and bank loans - will be mispriced, offering great opportunities to investors who can analyze them correctly. Investing successfully in leveraged companies requires thorough understanding of corporate finance, accounting, and the intricacies of the capital structure.