Author Topic: Getting leverage  (Read 13826 times)

scorpioncapital

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Re: Getting leverage
« Reply #40 on: May 13, 2018, 03:13:44 AM »
You can easily get very high and fixed rate leverage. Buy a highly indebted company on cash:)
 The look through leverage can be much higher than you can achieve on your own. However, one should ask if a company has to use vast amounts of leverage, perhaps a utility, or a bank to get a regular return to you of 10-12%, is it a really great business? And would you want to double leverage a company like that? My rule is if the company has high look through leverage I buy it on cash, if it has no leverage, I will use a little bit of leverage on the portfolio end. That's why I think Berkshire is so powerful. It has long term fixed rate leverage via float and on top of that it invests in companies expecting to get a 10% unlevered return. I wouldn't necessarily double leverage a stock like that, but Berkshire is a strong exception.
« Last Edit: May 13, 2018, 03:16:02 AM by scorpioncapital »