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America’s Oldest Gun Maker Went Bankrupt: A Financial Engineering Mystery

nytimes.com

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Re: America’s Oldest Gun Maker Went Bankrupt: A Financial Engineering Mystery

#171

Post by parrellel »

nradov wrote: post #166
parrellel wrote: post #164

Earlier quoted context omitted.

Eh, after fees most standard 401Ks are only marginally better than a bank account at this point.

Due to compound returns, a marginal advantage makes a huge difference over a 40 year career.

You'd hope, but a number of smaller plans have that entire advantage eaten, so you end up with no growth. Getting out of a lot of 401K plans and into something like an IRA is... advisable in many cases.

I'll admit that this is mostly a problem for small businesses, from what I read, and there are plenty of 401k's that aren't actively screwing people.

Re: America’s Oldest Gun Maker Went Bankrupt: A Financial Engineering Mystery

#172

Post by icelancer »

WillPostForFood wrote: post #100
systemkei wrote: post #93

Earlier quoted context omitted.

>employed in corporate IT since I was 19 unlikely you'll ever collect from that 401k friend!

It is a huge disservice to take a cheap shot at 401ks. There is almost no case where someone who has the opportunity to contribute shouldn't do so.

There's plenty of companies that do not provide financial match to a 401k. For people making average income for a 25 year old or so, they are better off putting it in a Roth IRA then.

Re: America’s Oldest Gun Maker Went Bankrupt: A Financial Engineering Mystery

#173

Post by icelancer »

bluejekyll wrote: post #20
sparrish wrote: post #14

Earlier quoted context omitted.

Agreed. This isn't a unique tale for a firearms manufacturer. This is a common tale for nearly any type of manufacturer that is bought out by private equity firms. They reduce costs and quality, load it with debt, suck it dry, and then dump it on their creditors.

I’ve read about this scenario many times, but I’m curious about why any creditor would lend money to a company that’s poised to do this. Wouldn’t these private equity firms lose the ability to borrow money based on past practices like this?

Bain Capital and others who do LBOs don't have a 100% failure rate. It's just that the failures are reported and the successes (Lenovo) are not celebrated.

Re: America’s Oldest Gun Maker Went Bankrupt: A Financial Engineering Mystery

#174

Post by icelancer »

jfk13 wrote: post #55
sparrish wrote: post #9

Earlier quoted context omitted.

As a firearm enthusiast, the answer to "How many guys does one need?" is always "Just one more." It's a fun hobby that I can spend time with my kids. They also make great investments as a quality firearm holds it worth and often increases in value.

And of course, the more of them we have around, the better the chances that one of them will somehow accidentally get misused one day. Oh, sorry; I'm sure you're entirely careful and responsible, all the time, just like every other firearms buyer. So there's clearly no problem with having an ever-increasing number of them around.

Firearms collectors don't generally collect the types of guns used in a majority of crimes, which are cheap handguns and carbines. They are usually collecting rifles and shotguns.

You'll find that the data overwhelmingly supports that cheap semi-automatic handguns are responsible for the majority of shootings out there, despite the media coverage of mass shootings often using an AR-15.

Re: America’s Oldest Gun Maker Went Bankrupt: A Financial Engineering Mystery

#175

Post by icelancer »

TallGuyShort wrote: post #43
Simulacra wrote: post #3

Earlier quoted context omitted.

There's also the issue - perhaps - of market saturation. How many guns does one need? My pro-gun friends typically seem to have 2-3 but shy away from any more than that.

Let's see, 3 for 3-gun matches, 1 more for PCC matches, 1 more for precision matches, a few extra if I don't compete in the same class for all of those, 1 the kids can shoot, 1 for my wife to carry, 1 for me to carry, bigger ones for the house and cabin, a few extras for the zombie apocalypse. No, there's plenty of demand for guns. Remington's just lost their former reputation.

> Remington's just lost their former reputation

This is pretty much it. Sad, considering I own a fine bolt-action paper puncher from Remington in .223. But it's no more complex than what you pointed out.

Re: America’s Oldest Gun Maker Went Bankrupt: A Financial Engineering Mystery

#176

Post by pkaye »

sparrish wrote: post #14
Blackthorn wrote: post #8

There's a certain amount of poetic justice here for Remington, seeing as how they acquired Marlin and then fired all their expertise, completely ruining the brand. Good riddance.

Agreed. This isn't a unique tale for a firearms manufacturer. This is a common tale for nearly any type of manufacturer that is bought out by private equity firms. They reduce costs and quality, load it with debt, suck it dry, and then dump it on their creditors.

What do creditors willingly allow this to happen? When a private equity firm buys up a business, it makes sense for creditors to renegotiate their contracts to protect themselves.

Re: America’s Oldest Gun Maker Went Bankrupt: A Financial Engineering Mystery

#177

Post by [deleted] »

dsfyu404ed wrote: post #6
Simulacra wrote: post #3

Earlier quoted context omitted.

There's also the issue - perhaps - of market saturation. How many guns does one need? My pro-gun friends typically seem to have 2-3 but shy away from any more than that.

>How many guns does one need? Need or want? Like any other hobby your limit is your budget. There are guns that exist for no other reason than the lulz ("hundred dolla problem solva" I'm looking at you). Historically inclined individuals could spend a fortune just collecting variants of one specific niche of firearms from a particular nation and time period.

[deleted]

Re: America’s Oldest Gun Maker Went Bankrupt: A Financial Engineering Mystery

#179

Post by onetimeusename »

dractori wrote: post #99
paganel wrote: post #36

> Because private-equity firms appear frequently as villains in the press, many people assume that they cater mostly to the superrich, earning high returns on investments for billionaire clients. They do. But by far the most important piece of their business — 48 percent, according to the data-analytics firm Preqin — is investing capital for American pension funds. This doesn't get mentioned often enough when talking…

The top 1% own 40% of the wealth and have realized 95% of the increase in wealth over the past decade: https://en.wikipedia.org/wiki/Wealth_inequality_in_the_Unite... "More recently, in 2017, an Oxfam study found that eight rich people, six of them Americans, own as much combined wealth as half the human race."

The claim that the top 1% have realized 95% of the increase in wealth over the past decade is spurious. I think the original study[1] that claim came from only argued that was the case for percentages of income growth, which is not wealth, and only true from 2009 - 2012.

I think it has been propagated since then as a different claim that the top 1% had 95% of the increase in all the wealth for the past decade. I don't think there is any evidence for this stronger claim.

[1]: https://eml.berkeley.edu/~saez/saez-UStopincomes-2012.pdf

Re: America’s Oldest Gun Maker Went Bankrupt: A Financial Engineering Mystery

#180

Post by cascom »

matthewaveryusa wrote: post #115

The part I don't get is how Cerberus made money. It seems like it was a zero-sum for Cerberus. They loaned the holding company 225M, and presumably got that money back through the holding buying the stock back from Cerberus after the holding sold the 11% corp. bonds. Is it that between when the holding bought the stock back from Cerberus and Cerberus (via the holding) sold the bonds Cerberus had control of Remington…

My reading (which is not helped by the fact that the reporter appears more or less financially illiterate from a corporate finance perspective) is that Cerberus essentially took $225m out of the company (saddled the company with expensive debt). This had the effect of de-risking their equity investment (as they essentially got their money out) but making the company very levered. The net effect was that now Cerberus had a call option on Remington, if things went well they'd make a ton of money, if things went south, it would be the debt holders issue, but they would't "lose" as they'd recouped their initial investment
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