639 Q2 (1).docx - While at work as a portfolio manager for...

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C a l c u l a t o n o f N e t A s s e t V a l u e A m o u n t T o t a l F i x e d A s s e t s , n e t o f i n t a n g i b l e s a d d : C a s h a n d E q u i v a l e n t s A c c o u n t s R e c e v a b l e l e s s : 2 , 6 7 5 . 8 5 5 . 3 2 2 3 . 1 While at work as a portfolio manager for the firm Fredericks and Sons, Inc. a wealthy client stops by. He is holding a folder and opens it as he sits down. He produces a spreadsheet that shows an analysis of Acme Corp. bonds, the ones he owns in his portfolio. The analysis was done by a competitor and it shows the bonds are worth far less than what he paid for them. Acme Corp. just went bankrupt and the bonds were bought based on being under-valued in terms of expected recovery. Anticipating an 18month bankruptcy, the net asset values of specific bonds compared to market prices were compelling. You liked the Acme Convertible and the Junior Subs due 2027. But the most compelling value was the JW Horizon Senior Subs 7.5% due 2024. It was issued by JW Horizon Corp. prior to being acquired by Acme last year. You had
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  • Fall '17
  • Dippold, Steffi

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