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Reading: "For Profit" & "Distressed Debt Analysis"
I read really dorky books.
I read a lot, I have for years, I didn’t read a lot in high school or college but somehow after all that I realized there were lots of things I hadn’t learned about so I just started buying - and actually reading - books. Most of them are non-fiction, biographies, histories, business books, science books, some of the worst are finance books. I’m reading two of them now that are actually quite good (albeit dense) and they seem to go well with the times we’re going through, both in the macro-level and within the cannabis industry.
First up is Stephen Moyer’s Distressed Debt Analysis, I’ve been at this for about two weeks and I’m maybe 2/3rds the way through it. It’s a little daunting but it’s a primer on understanding and investing in distressed companies. That could be pre or post bankruptcy (sorry cannabis) and is typically through the companies debt where sometimes attractive rates of return can be found if you’re willing to take the risk. I’ll post a longer Chat-GPT summary below, but this is interesting to me (and potentially to some of you) because of the immense stress the cannabis industry is currently under. Slowed growth, massive, outrageously expensive debt structures, lack of liquidity in stocks, taxation, lack of equity capital, massive Capex projects. The list goes on an on. The point here I’d try to make is that the cannabis industry as a whole is currently distressed, bonds are trading way below par, companies are struggling to get their debt refinanced and while perhaps there can’t be US based bankruptcies there are going to be Chapter 11 or Canadian parent company restructurings it is inevitable. A few companies have or are in the process of going through these processes in the US and they are incredibly messy. Distressed investing is not for the faint of heart and neither is cannabis investing but in a Venn diagram that overlap is potentially a new level of hell. Can it be profitable? Very likely but it’s going to take a long time.
The second book is William Magnuson’s “For Profit, a History of Corporations.” Livelier in part because I’m listening to this one but it is exactly as its subtitle explains a history of companies starting with Ancient Rome, Dutch East India Company and so-on. About half way through this (vacation with kids is not vacation fwiw) and the point seems to be Companies were setup to make money, to return a profit (there were other noble and ignoble reasons the author delves into but I’ll keep it simple) they were given the permission to act like a “person” in that they shield the investors/owners from liability, this led to greater risk-taking and tremendous positive change. Random tangent, Eli Broad wrote a book titled “The Art of being Unreasonable” referencing a quote I’ve since forgotten the author of, that all progress comes from someone being unreasonable and standing against the status quo. 100% true for the founders of companies, perhaps particular in Cannabis. Like them or not the current management teams of the MSOs are all trying to do something counter to prevailing wisdom (selling weed in the open and pushing for legal ability to do so).
Chat-GPT provided summaries:
"Distressed Debt Analysis" by Stephen Moyer is a comprehensive guide to analyzing and investing in distressed debt securities. The book is intended for professionals in the distressed debt industry, including hedge fund managers, portfolio managers, and investment bankers.
The first part of the book covers the basics of distressed debt, including the characteristics of distressed securities, the sources of distressed opportunities, and the key players in the distressed debt market. Moyer also provides an overview of the bankruptcy process and the legal framework that governs distressed debt investing.
The second part of the book focuses on the analytical tools and techniques used in distressed debt analysis, including financial statement analysis, credit analysis, and valuation methods. Moyer also covers the different types of distressed securities, including bonds, bank debt, and trade claims, and provides case studies to illustrate how to analyze and invest in these securities.
The third part of the book discusses the practical aspects of distressed debt investing, including portfolio management, risk management, and the mechanics of trading distressed securities. Moyer also provides insights into the market dynamics of the distressed debt market, including the impact of macroeconomic trends, regulatory changes, and industry-specific factors.
Overall, "Distressed Debt Analysis" is a comprehensive and practical guide to investing in distressed debt securities. The book provides a detailed overview of the key concepts, analytical tools, and market dynamics that are essential for success in the distressed debt industry.
"For Profit: A History of the Corporation" by William Magnuson is a comprehensive history of the corporation, from its origins in medieval Europe to its modern-day dominance in the global economy.
The book covers the evolution of the corporation from its earliest forms, such as guilds and religious orders, to its emergence as a powerful economic force in the 19th and 20th centuries. Magnuson examines the role of corporations in economic development, political power, and social change, and highlights the key individuals and events that shaped the history of the corporation.
Throughout the book, Magnuson explores the tensions between the public good and private profit that have been at the heart of the corporation's history. He also discusses the ways in which corporations have adapted and evolved in response to changes in technology, politics, and society, and the impact of these changes on the wider economy and society.
One of the key themes of the book is the tension between corporate power and democracy. Magnuson argues that the concentration of power in the hands of corporations has eroded democratic institutions and values, and he calls for a renewed focus on the public good in the governance and regulation of corporations.
Overall, "For Profit: A History of the Corporation" is a comprehensive and thought-provoking history of one of the most important institutions of modern society. Magnuson offers a nuanced and critical perspective on the role of corporations in economic development and social change, and provides insights into the challenges and opportunities of regulating and governing corporations in the 21st century.