Looking for distressed corporate debt
Looks like that somebody else has the general strategy I have been pursuing financially over the past half year:
“In the last six months it’s practically all the investing Third Avenue Value Fund has done,” he said. “I got so spooked by the stock market and the terrible performance in 2008. If I buy a performing loan with 30 percent yield to maturity, I don’t have to worry about the stock market.”
Back in February and March (and most specifically the bottom was in the first week of March), most of these investments were ridiculously undervalued. Now finding those 30% yield to maturities is much more difficult – the types of debt you have to invest in are of companies that are much more shadier. If you lower your debt expectations down to 20%, there are a lot more candidates around.
It is really difficult having to make subsequent investments at lower rates of returns, especially knowing the price you could have received earlier, but you can never base investment decisions on what historical asset valuations are – you can only look at the price that you are being offered today, compared to what your extrapolation of value is for the future.