Highly leveraged private equity buyers have left real estate investment trusts in the dust over the past three years, but the REITs are now in a strong cash position, operating with usually no more than 50% leverage and with access to relatively cheap money.
Just to make sure nobody missed his point, Kaplan followed up in 2008 with a paper called "Leveraged Buyouts and Private Equity, " co-written with Per Stromberg.
As part of leveraged buyout by private equity groups, Dallas-based TXU (nyse: TXU - news - people ) recently scrapped its plans to build 11 coal-fired plants, opting instead for three coal plants that include emissions-reducing technologies.
Pride is also highly leveraged with a debt-to-equity ratio of 1.173, making it the 15th most leveraged company in an industry typically associated with high debt loads.
Private-equity firms and leveraged buyouts, which is one of the ways Bain pursued its business, are, after all, pretty much capitalism parading around in its most naked state.
Acconci Trust claims in its complaint that in 2004 it purchased on the secondary market a 31.24% stake in Lincolnshire Equity Fund, a leveraged buyout investment fund set up by Lincolnshire Management in or around 1994.
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Unlike the more developed Western markets in which many private equity firms focus on leveraged buyouts or similar deals, emerging markets require a more hands-on approach with the family-run firms that dominate these economies, he says.
One caveat: The company is highly leveraged with a debt-to-equity ratio of .95.
The financial crisis humbled the Masters of the Universe who run the private equity firms that put together leveraged buyouts of companies.
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Among domestic equity ETFs (excluding short and leveraged offerings), the Guggenheim Spin-Off ETF ( CSD) , a somewhat obscure fund that specializes in this sort of thing, ranks 34th (out of 300) in terms of one-year price performance.
It simply makes economic sense to substitute debt for equity, and that's what leveraged takeovers and levereage buyouts do.
Recently, for example, Princeton University announced plans to drop half of its private equity managers as it shrinks investments in leveraged buyouts.
The biggest problems may occur not in the bond market but in leveraged loans, the debt issued by private-equity companies to finance their buy-outs of public companies.
Before that, he served as CEO of Columbia House, where he also led a leveraged buyout of the company by the private-equity firm the Blackstone Group .
Fully leveraged, the big operators made 25% returns on equity.
But that was long before Hanes began moving much of its production offshore, and before the Tobacco Master Settlement Agreement (under which the tobacco companies agreed in 1998 to pay hundreds of billions of dollars in damages for harming people's health), the leveraged buy-out of RJR by a private-equity firm, the elimination of federal farm price support for tobacco and decades of anti-smoking advertising.
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Lehman and Bear Stearns leveraged themselves to the hilt, probably 40 to 1 on equity capital.
Instead, Yale's largest equity investments are in private venture-capital and leveraged buy-out partnerships.
Less income after tax will result in lower marketplace valuations and leave equity-rich companies more vulnerable to takeovers or leveraged buyouts.
The investment strategy pursued by Reijtenbagh was thus hugely leveraged, given the amount of borrowed funds the underlying private equity funds used to make their portfolio investments.
Although the transaction is considered a leveraged buyout, it's different from the typical private-equity deal.
On returning to run the firm in 2005, after the ejection of the risk-averse Philip Purcell, he declared that it was under-leveraged and needed to push into mortgages, proprietary trading and private equity.
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The results capped a record year for the bank, which still generated a 33 percent return on equity despite the turmoil in credit markets and a slump in leveraged buyout activity, as Goldman escaped most of the bond market turmoil plaguing fellow brokers.
Dell shares have continued to rally Tuesday after Bloomberg and then the Wall Street Journal reported that the company has been in talks with TPG, Silver Lake and other private equity investors about the potential for what would be an enormous leveraged buyout of the PC and enterprise computing company.
It was just 18 months after a little-known private equity shop, 3G Capital, took Burger King private in a leveraged buyout. 3G Capital is backed by a number of Brazilian investors that include billionaire Jorge Paulo Lemann.
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In our view, a leveraged recapitalization makes no sense and its only purpose would be to put substantial equity stakes into friendly hands to entrench management and transfer effective control without payment of a premium or even, it appears, a shareholder vote.
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Rather than providing companies with incentives to take on more debt through stock buybacks, acquisitions or leveraged buyouts, our tax policy should encourage healthy growth and a strong economy through equity investments that can provide income to investors.
Figures from Barclays Trading Group of Fairfield, Iowa, show that 16% of equity-based hedge funds, designed to be relatively conservative, are leveraged at 100% or more of their asset values, meaning the fund has a dollar or more of debt for every dollar in assets.
Leveraged buyouts are funded with a relatively small percentage of cash put up by private-equity investors and their partners, and a typically much-larger percentage of new debt, which becomes the burden of the company being bought.
It was the first leveraged buyout since the demise of Lehman Brothers in the fall of 2008, according to private equity researcher Prequin.
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