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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

#251

Post by simonebrunozzi »

dractori wrote: post #195
onetimeusename wrote: post #179

Earlier quoted context omitted.

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'…

You're absolutely right, I misread that statistic.

And you get an upvote because answers like yours are simply beautiful to read.

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

#252

Post by CalChris »

sigstoat wrote: post #231
CalChris wrote: post #150

Earlier quoted context omitted.

Cerberus buys Remington for $118M in cash and assumes $252M in Remington debt. Except that it wasn't Cerberus, it was a Cerberus subsidiary S which Cerberus owned with stock X. Then Remington borrowed $225M which it transferred to S which then bought back its stock X from Cerberus. Cerberus is then out of the transaction with $225M - $118M. Remington + S (which Cerberus no longer owns) has $252M + $225M in debt.

> Then Remington borrowed $225M which it transferred to S which then bought back its stock X from Cerberus. hmm. so, who is willing to loan Remington $225M in that situation? it seems like "recently bought by private equity company known for shenigans" would discourage banks and prospective bond purchasers?

the holding company offered a generous interest rate of around 11 percent. When the interest payments were due, the holding company paid them not in cash but with paid-in-kind notes, that is, with more debt.

Who could refuse such a deal?

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

#253

Post by sDlEzAtyoNAz »

fjsolwmv wrote: post #247
sDlEzAtyoNAz wrote: post #62

Earlier quoted context omitted.

And the better chances that one will be used intentionally to protect a productive and decent member of society from a violent criminal.

That's certainly the fantasy.

You say fantasy, surveys say thing that happens hundreds of thousands of times per year in the US. I think I'll believe the surveys on this matter.

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

#254

Post by kyrieeschaton »

Remington's product quality went way south soon after the acquisition and hasn't really recovered. When you have a very traditional market for your products (many firearms designs are decades old), those products are expensive, and potentially designed to save your life or at minimum contain tens of thousands of PSI inches from your face, losing your reputation for quality is a death sentence, and due to the capital costs, you're unlikely to be able to squeeze out cash by burning your reputation.

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

#255

Post by ericd »

mwfunk wrote: post #203
nickelcitymario wrote: post #147

Earlier quoted context omitted.

Well, thought experiment: John lives in extreme poverty. He's debt free, but is unable to adequately feed himself or his family. Several of his children have died from malnutrition. Marc lives in a nice suburban home, has 3 square meals a day, so does everyone in his family. However, his debts (including his mortgage, car payments, student loans) exceed his savings. If our intuition is wrong, then John is winning. He…

They’re both screwed. I’d rather have crippling debt than children dying from malnutrition, but obviously both Marc and John are completely screwed in different ways. They’re both losers in this scenario, there are no winners.

You have to keep in mind the the expected value of lifetime earnings of both. College students from top schools going into consulting/finance aren’t poor coming out of college, even though they may be deep in debt, because the expected value of their labor potential is in the multi-millions.

Not quite the same as having it in-hand, but it’s real unless conditions change drastically.

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

#256

Post by dfrage »

fjsolwmv wrote: post #247
sDlEzAtyoNAz wrote: post #62

Earlier quoted context omitted.

And the better chances that one will be used intentionally to protect a productive and decent member of society from a violent criminal.

That's certainly the fantasy.

It is undisputed that there are a great many legitimate "defensive gun uses" per year.

How many is of great dispute, getting into minutiae all the way down to survey question branching due to an unbridgeable cultural gap, but please don't deny even the lowest estimates of tens of thousands.

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

#257

Post by kyrieeschaton »

ryanmarsh wrote: post #74
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.

Ask more pro-gun friends. It kind of becomes an addiction. Everyone I know has a 30 gun safe that's damn near full.

Yeah, but a full 30 gun safe only has about 10 guns in it.

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

#258

Post by ericd »

pitaj wrote: post #210
mwfunk wrote: post #203

Earlier quoted context omitted.

They’re both screwed. I’d rather have crippling debt than children dying from malnutrition, but obviously both Marc and John are completely screwed in different ways. They’re both losers in this scenario, there are no winners.

That doesn't seem even remotely true. Taking on large amounts of debt can be risky in many cases. But consider the following case: - newly purchased $150k home with down-payment of $30k - $80k savings / investments - $20k car - $80k/yr income This person is not at risk, but they have a net worth of $[30k + 80k +20k - 150k] = $-20k

When valuing a business, you typically look at the discounted future cash flows in addition to assets/debt. Basically, you factor in their profitability and calculate the current value of owning that stream of cash flow. People have cash flows as well. So even though people typically only count assets/debt, Marc effectively has a net worth substantially higher than -$20k if he’s saving more than he’s spending, which jives better with people’s intuition about Marc’s situation.

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

#259

Post by kyrieeschaton »

jcranmer wrote: post #17
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.

There is an intriguing trend in the United States where, for the past several decades, the number of gun owners has gone down but the number of guns has gone up.

That claim is solely based on survey data, and there has been a undeniable trend towards false responses as people become more discreet. It goes hand-in-hand with the move towards home manufacturing.

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

#260

Post by ericd »

SketchySeaBeast wrote: post #209
bluGill wrote: post #185

Earlier quoted context omitted.

If you die deep in dept you managed to cheat at life: your cost of living was higher than input. If you die rich you got cheated: you put more effort into life than you got out of it.

That assumes that in some way effort ends up being related to your bank balance.

It’s at least somewhat related, all else being equal...
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