We Wrote the Book on Vulture Investing

Category: book, distressed securities

Vulture Investing, otherwise known as Distressed Securities investing, is an often misunderstood piece of the investing world. While many tend to think of it in a negative light simply because the word “Vulture” is used, it’s actually a necessary part of the ecosystem. Besides being specialists in this field, our founder, George Schultze, also wrote the book on the topic. You can get the book over here on Amazon. The title “The Art of Vulture Investing: Adventures in Distressed Securities Management” gives a pretty good idea of what the book is about, but we’ve got a special chapter sample available for you to look at.

Chapter 1: Emerging From the Egg Sample

I have always had something of a knack for business. The youngest of eight
children, I spent much of my youth in suburban New Jersey looking for
ways to make a buck. Whether it was mowing lawns, shoveling driveways,
or delivering newspapers by bike on a paper route, I was usually working
to earn some cash during my spare time instead of watching TV or playing
video games. Since money was tight at home after my parents separated, I needed to
find for myself the means to keep up with my peers in affluent Upper Saddle
River. By the time I was a teenager, I had rotated through all sorts of jobs,
learning a good deal about business in the process.
One formative experience was a job I took at a local men’s clothing store
when I was in high school. Irv Lerner’s, set in a highway strip mall near the
New Jersey/New York State border, paid me minimum wage, then $3.25 per
hour, which even at the time was very little. The work was tiresome and
boring, but it gave me a firsthand look at how difficult and competitive
retailing could be.

One weekend, my manager asked me to bring out clothing from the
back room to a big table at the front of the store for Irv Lerner’s annual
sidewalk sale. The project took me hours—folding and organizing stacks
and stacks of men’s shirts and pants—but when I was done, I was proud of
my beautiful display.

Unfortunately, when I returned to work on Monday after the sidewalk
sale, I found that although hundreds of shoppers had rifled through my neat
stacks, leaving a huge mess for me to clean up, they had bought hardly
anything. I quickly decided that retail wasn’t for me (and, I guess it really
wasn’t for the owner either, since he barely came to work one day a
week). Like most strip-mall retailers of its type, I believe Irv Lerner’s eventually
went bankrupt, killed off by the rise of big-box retailing, which transformed
the industry with its high-tech inventory management and enormous
purchasing power.

My next job was at the headquarters building of Magnavox, the electronics
company, in Mahwah, New Jersey. I worked evenings as a maintenance
engineer—that is, as a janitor—cleaning the executive offices. I found
this much more pleasant, and considerably better paid, at $9.15 per hour.
The lesson for me was that dirty work, although stigmatized, could be
much more profitable than a seemingly more-desirable job. Like a vulture
investor’s work, a janitor’s work entails handling things someone else has
discarded. Nonetheless, as a sensitive teenager, I was afraid of what people
would think, so I didn’t tell any of my high school friends or girlfriends
where I was working.

Another lesson I learned from cleaning the Magnavox offices was how
much you can tell about people from their trash. At the end of the day,
it was obvious which employees worked harder—and equally obvious that
entire departments just sat there all day, filling up their trash cans with
cigarette butts and coffee cups on the shareholder’s dime. For some reason,
young as I was, this lack of productivity frustrated me to no end. I yearned
to bring the problem to someone’s attention, but of course it was hardly
my place to take it up with senior management. I would get my chance
later in life.

Wondering What Happens Next?

Then pick up the book over on Amazon, and give it a read!