Hi petekoby,
Thanks for your comments. Regarding GX, I regard a position there to be highly speculative and prone to continuing volatility. Thus, I was surprised to find someone like Jay who was seeing value there. I wanted (and still do) to find a reason to see a light at the end of the tunnel. Once the consolidation of the telecom industry is completed, in 2005 or so, a number of bonds that are trading at 20c or 50c very likely will recover to par. It is the sorting of the wheat from the chaff that is the problem. In the case of GX, I'm trying to get a balanced view of the actual assets and earning potential of the network versus the flim flam house of cards financial structure that's been erected by Winnick. I know he will reward himself handsomely, using whatever clever means he can, but I'm also confident that the equity holder is toast, and I'm reserving judgement, at present, for the bond holder.
A good antecedent study of what is going on in the telecom sector, as regards debt, would be a review of the bond market in railroads in the 1950's, as the industry was falling out of favor due to increased reliance on airlines in the U.S. Many bonds simply defaulted, but OTOH, there were several issues that could have been gotten in the late 1950's for 10 cents on the dollar that eventually came back to par, after consolidations strengthened balance sheets of the remaining players. Something like this is bound to occur again in the present telecom industry.
-R. |
