Monday, February 20, 2017

Peabody Energy Prices $950 Million Term Loan

The term loan is expected to close on April 3, 2017, concurrent with the anticipated effective date of Peabody Energy’s plan of reorganization and subject to court approval. The proceeds from the term loan will be used to fund a portion of the distributions to creditors provided for under the plan of reorganization.

Friday, February 17, 2017

"'Alpha' in Real Estate"

Great essay in PIB about real estate investing:

I’ve met many rich men in my long life, and I must confess that the category of rich man that most annoys me is the real estate landlord, simply because he seems to do the least work for his wealth. I’m not talking about visionary developers who create buildings out of nothing, but rather those who allocate their capital—or, often, the capital of their ancestors—to existing real estate, leverage it up, and sit back passively for years collecting rent checks and refinancing along the way, secure in the knowledge that the government offers explicit and implicit subsidies to their “efforts.” It’s both amazing and annoying how well you can compound wealth over time in this way, provided you’re lucky enough to avoid a downturn in which your leverage kills you.
I've seen many real estate investors blow up. They seem to operate under the philosophy that they shouldn't have as little equity as possible in their holdings, constantly tapping it with refinancings and using the proceeds to buy more property.

Great Composers: "Bach Johann Sebastian"

Thursday, February 16, 2017

Tuesday, February 7, 2017

Good Point on Trump & Markets

A comment over at MR:

I am perplexed by the strength of the markets. I think Trump is a buffoon – but a very amusing buffoon with the right sort of political enemies. I would have thought that the markets would be more upset. After all, they bought and paid for Hillary. Surely they expected value for money?

It suggests that the Clintons weren’t selling influence. They were selling protection. People had to pay them or they would regret it later when Hillary was in power. So everyone is relieved that they are gone. For now.

Sunday, February 5, 2017

Review of The White Sharks of Wall Street: Thomas Mellon Evans and the Original Corporate Raiders by Diana B. Henriques

Thomas Mellon Evans was a raider who took control of companies in the 1950s, decades before the LBO/M&A boom. This biography, White Sharks is perhaps the poorer cousin of the recent Dear Chairman, which I think is a better pro-activism book.

However, it's good to be steeped in this stuff if you want to do it, to know the history and where the rules and traditions of activism and takeovers came from. Just a funny example, the SEC's "flimsy proxy rules" were "designed for the polite coronation of incumbent management," and not, you know, an actual contested election. (Which reminds me, I do not think that it is legitimate for management to use shareholder money to lobby the shareholders to keep their sinecures.)

And speaking of roll-ups and conglomerates, this sheds light on why the 60s conglomerates were built of dissimilar companies instead of being horizontal or vertical integration strategies:

"The government's widely publicized antitrust initiatives, so infuriating to Tom Evans, had made most new company-shoppers more careful. They shunned companies whose business or products resembled their own, and they ignored vendors and distributors who stood upstream and downstream from their own manufacturing processes."
What a typical unintended consequence of regulation.


Review of Ogilvy on Advertising by David Ogilvy

Ogilvy on Advertising was published in 1985, and David Ogilvy pounds the table that long, verbose copy sells best.

He talks about copy that's 500 words, or even thousands of words, in newspaper and magazine print advertisements. As an example, Ogilvy liked the Grand Canyon Battle ads written for the Sierra Club by Howard Gosage. Overall, he thought advertisements should be hard to distinguish from the content that surrounded them.

Yet you don't see much copy like that anymore. Are people too illiterate or too low attention span? Or is advertising more like fashion, where the important thing is to be a status signal, which results in constant change?