3 ms·
One problem is that it is hard to capture the quality of debt: Did a company buy up competitors that turned out not to be worth the price? Did they invest in in
by Zigurd 9y ago
One problem is that it is hard to capture the quality of debt: Did a company buy up competitors that turned out not to be worth the price? Did they invest in infrastructure, which seems like good debt, but nuclear reactors have turned out to be albatrosses. You see much of the same thing in telecom. In both cases the customer is at least semi-captive, and can be fleeced to pay for mistakes.
- motohagiography 9y agoSo straight shorting debt play, you would need that level of resolution. If you are looking to fund disruptive startups to leverage a structural pricing disadvantage that results from incumbents costing model, which has exposure to multiplying interest rates and flat revenues, the quality of the debt doesn't so much matter. I'm imagining things like, "3d print me a small refinery," or "blimp-drop me a sawmill in shipping containers," or "rent me a seed mill on a flatbed," "build me a foldable certified meat processing plant," or "create a new tractor platform with an open multi-tool interface." etc.