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The Vulture Investors
"What kinds of investors actually choose to make their living by seeking out troubled companies and becoming mired in the complexities and contentiousness of a bankruptcy or out-of-court workout?" - Hilary Rosenberg (from The Vulture Investors)
Welcome to the big-time, big-stress-and big-profit-world of vulture investing. From the eleventh-hour save of Donald Trump's casinos, to the tempestuous history of Wheeling-Pittsburgh Steel, to the rocky restructuring of the massive Revco discount drugstore chain, Hilary Rosenberg takes us on a fast-moving journey through some of the major bankruptcies of the 1980s and 1990s-and brings to life the infamous, talented arbiters at the heart of their recovery. Meet the so-called "vulture investors" who cast their sights on distressed concerns, buy out debt, and skillfully forge their way to rich returns. Quietly upstaging the flashier corporate tycoons and raiders of the previous decade, men like Leon Black, Ronald LaBow, Sam Zell, Talton Embry, and Martin Whitman have helped to make a more efficient market in this obscure sector of investment, and their success may even inspire the quickly evolving business cultures of Asia and Latin America.
The vulture investors made their way to the forefront of American business during the troubled period when declaring bankruptcy became commonplace among debt-heavy companies. Buying out debt and seeing through the rehabilitation of companies as well-known as Sunbeam and Bloomingdale's, these unique players have changed the face of the distressed securities market. In her own animated, absorbing, and original style, Hilary Rosenberg creates thoroughly researched reenactments of the vultures' greatest exploits to offer an intriguing examination of their methods and their madness-and reveals the important role of these controversial characters in aiding worldwide economic recovery.
Praise for The Vulture Investors
"A lively account of the hardy band of investors who look for-and find-gold in capitalism's junk pile. Rosenberg not only tells their stories with captivating relish but weighs the overall economic impact of their exploits. This book is a valuable introduction to 1990s-style deal-making." - Chris Welles, Senior Editor, Business Week
"In a tour de force of punchy business writing, Rosenberg dissects a little-known but increasingly common high-stakes financial preying on companies in distress. . . . The author relates these intricate, suspenseful narratives in a clear, lively style that always instructs and often amuses." - Publishers Weekly
"Reads like a good suspense novel." - Library Journal
Welcome to the big-time, big-stress-and big-profit-world of vulture investing. From the eleventh-hour save of Donald Trump's casinos, to the tempestuous history of Wheeling-Pittsburgh Steel, to the rocky restructuring of the massive Revco discount drugstore chain, Hilary Rosenberg takes us on a fast-moving journey through some of the major bankruptcies of the 1980s and 1990s-and brings to life the infamous, talented arbiters at the heart of their recovery. Meet the so-called "vulture investors" who cast their sights on distressed concerns, buy out debt, and skillfully forge their way to rich returns. Quietly upstaging the flashier corporate tycoons and raiders of the previous decade, men like Leon Black, Ronald LaBow, Sam Zell, Talton Embry, and Martin Whitman have helped to make a more efficient market in this obscure sector of investment, and their success may even inspire the quickly evolving business cultures of Asia and Latin America.
The vulture investors made their way to the forefront of American business during the troubled period when declaring bankruptcy became commonplace among debt-heavy companies. Buying out debt and seeing through the rehabilitation of companies as well-known as Sunbeam and Bloomingdale's, these unique players have changed the face of the distressed securities market. In her own animated, absorbing, and original style, Hilary Rosenberg creates thoroughly researched reenactments of the vultures' greatest exploits to offer an intriguing examination of their methods and their madness-and reveals the important role of these controversial characters in aiding worldwide economic recovery.
Praise for The Vulture Investors
"A lively account of the hardy band of investors who look for-and find-gold in capitalism's junk pile. Rosenberg not only tells their stories with captivating relish but weighs the overall economic impact of their exploits. This book is a valuable introduction to 1990s-style deal-making." - Chris Welles, Senior Editor, Business Week
"In a tour de force of punchy business writing, Rosenberg dissects a little-known but increasingly common high-stakes financial preying on companies in distress. . . . The author relates these intricate, suspenseful narratives in a clear, lively style that always instructs and often amuses." - Publishers Weekly
"Reads like a good suspense novel." - Library Journal
Hardcover
First published June 30, 1992
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Displaying 1 - 6 of 6 reviews
March 5, 2013
A highly educational read. The structure differs from that of the Market Wizards, in that although Rosenberg runs through a gamut of high-profile distressed debt investors, techniques and anecdotes, the book is not a series of interviews but rather a series of blow-by-blow cases. There is a lot to take away, in terms of a broad feeling for the issues involved in corporate bankruptcy and exchange offers, or for how capital structure, collateral, bargaining position, etc, can affect a position. However, it is far from a textbook -- the issues are covered on an anecdotal basis, as per case study, rather than in a theoretical and comprehensive manner.
I also think the book could have benefited from clearer presentation of financial information -- Rosenberg describes in some detail the financial structure of each target company, but it would have been much clearer to show a simplified snapshot of the balance sheet before and after the restructuring, to give readers a better of sense what exactly happened; possibly the info was not available in every case, but if demonstrated in even a few cases it would enhance the learning value immensely.
The largest takeaway for me is perhaps a sense of how involved and time-consuming vulture investing is. Virtually all of the investments involved days of 24-hour, down to the wire style hard-headed negotiation, in some cases over a period of years. Managing the position seems an extremely activist task next to investing in investment grade or even high yield but liquid bonds. As with many other roles in finance, your personality has to suit your style.
It is also interesting to observe how a shrewd and large investor may take positions across different parts of the capital structure, in order to influence a bankruptcy process in a certain way. It puts paid to the notion that just because you are senior debt, you will have seniority; many cases involved neat tricks of corporate finance that benefited the equity holders or junior bondholders over the senior; capital structure is not straightforward in bankruptcy.
(The last point makes me slightly cautious of, for example, the current case where Carl Icahn is taking a position in RIG and calling for a reinstatement of dividend; this would weaken the company financially if it is not yet in a position to pay out cash; however, Icahn may have a position in the debt structure, and depending on his price could benefit from a restructuring; someone holding just an equity position may like the dividend but not realise his risk is asymetrical, while Icahn could benefit either way. Generally speaking Icahn doesn't come off very well in the book -- he is acknoledged as highly succesful but a real hard-driving asshole.)
I also think the book could have benefited from clearer presentation of financial information -- Rosenberg describes in some detail the financial structure of each target company, but it would have been much clearer to show a simplified snapshot of the balance sheet before and after the restructuring, to give readers a better of sense what exactly happened; possibly the info was not available in every case, but if demonstrated in even a few cases it would enhance the learning value immensely.
The largest takeaway for me is perhaps a sense of how involved and time-consuming vulture investing is. Virtually all of the investments involved days of 24-hour, down to the wire style hard-headed negotiation, in some cases over a period of years. Managing the position seems an extremely activist task next to investing in investment grade or even high yield but liquid bonds. As with many other roles in finance, your personality has to suit your style.
It is also interesting to observe how a shrewd and large investor may take positions across different parts of the capital structure, in order to influence a bankruptcy process in a certain way. It puts paid to the notion that just because you are senior debt, you will have seniority; many cases involved neat tricks of corporate finance that benefited the equity holders or junior bondholders over the senior; capital structure is not straightforward in bankruptcy.
(The last point makes me slightly cautious of, for example, the current case where Carl Icahn is taking a position in RIG and calling for a reinstatement of dividend; this would weaken the company financially if it is not yet in a position to pay out cash; however, Icahn may have a position in the debt structure, and depending on his price could benefit from a restructuring; someone holding just an equity position may like the dividend but not realise his risk is asymetrical, while Icahn could benefit either way. Generally speaking Icahn doesn't come off very well in the book -- he is acknoledged as highly succesful but a real hard-driving asshole.)
December 29, 2020
My absolute favorite book. I read this first in the 1990's. It was a pick up from The Strand bookstore in NYC. What more fitting than a distressed book on distressed investing?!? This is the book that sparked my passion and career path.
It tells several stories while imparting some technical knowledge about the bankruptcy code such that even a young future distressed investor got the feel. It covers the (then) players, some of whom I wound up interacting with.
I've read a lot of books about investors and/or distressed investing and this is still the pinnacle to me.
It is mostly narrative, so this isn't the place to learn the bankruptcy code about debt and priority but it will give a layperson the rough lay of the land in an enjoyable manner. An experienced pro might well find it enjoyable.
It tells several stories while imparting some technical knowledge about the bankruptcy code such that even a young future distressed investor got the feel. It covers the (then) players, some of whom I wound up interacting with.
I've read a lot of books about investors and/or distressed investing and this is still the pinnacle to me.
It is mostly narrative, so this isn't the place to learn the bankruptcy code about debt and priority but it will give a layperson the rough lay of the land in an enjoyable manner. An experienced pro might well find it enjoyable.
February 10, 2021
It wasn't terrible, it was just repetitive. If you read maybe two of the cases in the book then you've pretty much read them all. The writing gets a bit formulaic and repetitive as well...."Thing XYZ may also happen, for example Person Y called Company Z to exchange some of their debt for equity". Having said that, the cases are interesting, particularly if you pick a couple out. I wish there was more commentary on the culture; the author touches on this briefly in describing the different kinds of vultures. There was also not much 'background flavor' as to what was going on in the economy for the different cases, often it was a snippet here or there in a 50 page case study.
Overall not a bad read, but just long in the tooth.
Overall not a bad read, but just long in the tooth.
October 24, 2024
Interesting collection of stories. I think the book is worth reading to get a Birds Eye view of the types of negotiations that take place in these bankruptcy deals, but the commentary stays at a very high level. I enjoyed reading about the different characters, capital structures, and bargaining positions at play in these deals. However, we’re often told by the author what happens but not necessarily how or why. I’d like more details about the business fundamentals and how the investors arrive at their assessment of value for the various securities.
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March 23, 2025This is not a good introduction to bankruptcy practice. You really need to read a primer first and then read this to appreciate all the shenanagins, strategies and tactics laid out.
September 19, 2016
I was recommended this book by someone because I loved the Masters of Private Equity and Venture Capital. However, I didn't like this one nearly as much. This was much more dry and didn't share much on each individual's strategy. I also thought there was a lot of unnecessary language in the book.
Displaying 1 - 6 of 6 reviews