Some Buyout Firms Taking Debt-Laced Dividends

A new Moody’s report shows that certain aggressive buyout firms are taking debt-financed dividends from the companies they own, and “potentially jeopardizing their ability to navigate a downturn,” according to an article in Institutional Investor. The report shows that, since the end of 2009, Leonard Green & Partners, American Securities, Golden Gate Capital, TPG, and Apollo Global Management “have most frequently taken debt-financed dividends from companies they’ve bought,” with Apollo standing out because the dividends… Read More

Rising Leveraged Debt a Worry

The number of leveraged loans (lending agreements with the most indebted companies in the U.S. and Europe) is high, according to The Wall Street Journal, a “development that investors worry could pressure financial markets if the global economic expansion starts to fade.” SBC Global Market Intelligence data shows that volume for leveraged loans is up 53% this year in the U.S. and is on track to beat the 2007 record of $534 billion. Even though… Read More

Want Private Equity Like Returns? Try a Levered Small Cap Stock Approach.

One young hedge-fund manager says that an investor can enjoy the same hefty returns touted by private-equity firms (through the purchase, turnaround and resale of troubled companies) through buying highly leveraged small-caps stocks. That manager, Dan Rasmussen, is profiled in a recent article by Forbes’ Daniel Fisher. Rasmussen makes the bold argument, Fisher writes, that private equity “isn’t that complicated.” With a history and literature degree from Harvard, Rasmussen was one of the first undergraduates… Read More