Martin Whitman is undoubtedly one of the best value investors and thinkers of our time. Whenever someone like Martin Whitman comes out with a new book one can be sure it will be an interesting and educational read. I recently read Distress Investing by Martin Whitman which was published by Wiley in 2009.
Martin Whitman offers an excellent book that provides both the background and nitty gritty about distress investing. Anyone who has read Whitman’s Martin Whitman is undoubtedly one of the best value investors and thinkers of our time. Whenever someone like Martin Whitman comes out with a new book one can be sure it will be an interesting and educational read.
Martin Whitman offers an excellent book that provides both the background and nitty gritty about distress investing. Anyone who has read Whitman’s other books knows that he writes in a very eloquent manner that a casual reader may have trouble understanding. This is especially true in Distress Investing because the topics discussed are quite complex. However, as usual Whitman organizes the book in a manner that makes it a valuable read for a serious investor.
Someone who is very knowledgeable in bankruptcy law has a big advantage reading this book. As I will mention many times in this article one cannot invest in distress securities without knowledge of the current bankruptcy laws. Whitman tries to explain the current laws however without any background in the area it is difficult to grasp.
The book consists of two main parts. The first part of the book discusses the landscape in today’s distress investing world. It discusses the impact that bankruptcy law plays in the investment process. I cannot stress how significant one’s knowledge must be of this area to understand investing in distress securities. Marty Whitman also does a good job explaining the competing players inside and outside of the company who play a big role in whether the creditors get paid,; and whether the company can in a case of chapter 11 bankruptcy, reorganize adequately. Whitman discusses control investors, various secured and unsecured levels of creditors, vendors, professional like bankruptcy lawyers, the court and other various players in the process. He explains how everyone has their own personal interests and how this can play out during the bankruptcy process.
The second part of the book discusses some actual bankruptcies and how they should be analyzed by an investor. Whitman includes two detailed cases; one of a large company Kmart and a small company Home Products International. Whitman details step by step, how he analyzed these investments and went through all the numbers to help the reader understand the investment process in both cases. Whitman does a superb job analyzing the balance sheet and trying to analyze which classes of creditors (secured and unsecured) will be repaid and what percentage of their claim they will receive.
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Disclosure: New FTC guidelines require me to disclose I have a material connection because I received a free copy of the book to review.