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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: armi who wrote (43283)7/12/2011 12:10:42 PM
From: Difco  Respond to of 78618
 
Excellent points, definitely not a safe investment - I see your points.

IMO upside thesis is based on the facts that the cash flow is sufficient to support the debt level and since equity approximates 10% of debt, then we have a leverage situation on our hands, where increase in assets would increase equity more than the debt.

On the other hand, you are right, that decrease in assets could be very dangerous to the equity position.


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