Running Head: SUMMARY OF SENIOR SECURITIES WITH SPECULATIVE FEATURES 1

Summary of Senior Securities with Speculative Features

Name

Institution

Date

SUMMARY OF SENIOR SECURITIES WITH SPECULATIVE FEATURES

Summary of Senior Securities with Speculative Features

Introduction
Merkins Blood and Judgment looks at the various types of bankruptcy scenarios with
the use of real life cases and further delves into the arising investment opportunities associated
with distressed investing from the point of view of the value buyer. According to Merkin,
bankruptcy can materialize either through liquidations or as reorganizations which come in the
form of a selection of cash and securities or through control of a reorganized company. He
contrast liquidation to the third form of bankruptcy in which an investor seeks to control an
ongoing concern in that the former seeks to realize profits through the sale of the various
resources and assets owned by the company while the latter seeks continuity of the venture under
supervision of the investor. Merkin explains that the idea behind benefitting from distressed
investing centers around finding innately profitable ventures or valuable assets at a considerably
low price. He further adds that Graham and Dodd advise investors to purchase bonds that are
undergoing a depression period as investments are only viable if they can withstand hardships.
The title of the essay Blood and Judgment suggests an underlying sinister motive
hidden under distressed investing, perhaps because it entails investing in companies that are
undergoing bankruptcy. The essay however gives an interesting point of view with regards to
choosing a mode of investment. The key benefits of distressed investing include the relatively
low prices with which investors can obtain innately profitable ventures or valuable assets and the
sense of assurance that is gained from investing in ventures that have withstood adversity. From
this perspective, it becomes clearer that distressed investing, under careful scrutiny, is indeed the
purest embodiment of value investing.

SUMMARY OF SENIOR SECURITIES WITH SPECULATIVE FEATURES

References
Merkin, E. J. (2009) Senior Securities with Speculative Features. In B. Graham & D. L. Dodd
(Eds.), Security Analysis (pp. 265-288).New york, NY :McGraw-Hill