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by heifetz 2699 days ago
most companies also have hard assets, e.g. inventory, real estate, IP, equipment, etc. If you're ok with paying 15x P/E which is the average S&P P/E, then 7x leverage isn't so bad...

Although the companies with these levered loans are a lot smaller than S&P 500 companies.
2 comments
cinquemb 2699 days ago
Leverage agaisnt hard assets != leverage agaisnt equity (which you were talking about), and we're talking about individual companies P/E. Everyone cannot hold an index (if everyone does so, there is no incentive to weed out bad companies), some of which are good about not including neg eps companies in the P/E caluclation [0].

[0] https://www.marketwatch.com/story/heres-the-shocking-truth-a...

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heifetz 2699 days ago
no it's not, and I know the two are different definitions. However, what I'm saying is that a 7x 1st lien leveraged loan against a company that is trading at 14x P/E is essential 50% the market value of the company. Of course, the hard assets of the company is probably a lot less than that.
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nickles 2699 days ago
> Although the companies with these levered loans are a lot smaller than S&P 500 companies.

Netflix isn't an S&P 500 company?

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