The Art of Vulture Investing: Adventures in Distressed Securities Management

CHAPTER 8

A Vulture’s Philosophy

In all countries where the vulture lives it is protected by law, and in many places the destruction of so useful a bird is visited with a heavy fine.

—Reverend John George Wood, Birds and Beasts

Despite their unattractive appearance and gruesome occupation, vultures perform an important function in nature, which, throughout history, discerning people have always appreciated. I hope that this book has given you a similar appreciation for the function that vulture investing serves in the corporate lifecycle.

Perhaps you may decide to try it for yourself, if you have the resources to do so. Now may be a particularly good time to get into the field, since more companies than ever are going through reorganization, or have done so recently. These reorganizations, in part, are a result of the global credit crisis that started in the United States and continues in Europe now. More often than in most previous credit cycles, we now see inefficiently priced securities across many different industries trading well below their intrinsic fundamental value.

Unfortunately, it appears that more and more governments, from municipalities and states to the U.S. federal government—as well as many governments in other countries—are also overleveraged. In the future, we may well see more government defaults as we saw with Greece during 2012.

As I have outlined in this ...