For investors, the most interesting aspect of distressed debt investing, which by itself is generally viewed as risky, is the portfolio diversification benefits it offers. Although distressed debt opportunities are cyclical, in that they multiply during economic slowdowns, the time taken to profit from them depends on how long a firm takes to restructure, which varies from one case to another. The process can be lengthy - for instance, if the negotiations between a firm's management team and its creditors start to drag. Alternatively, it can be expedited in a matter of months.
"Distressed debt investors should maintain a diversified portfolio," said Arik KIslin, Principal at Linx Industries.
In the upcoming year target areas beyond the usual suspects in housing and autos. Keep your powder dry and dollar cost average your investments. Wait for opportunities in airlines, apparel, leisure travel, hospitality, gaming, retail, recreation, restaurants, media, and manufacturing. As a group, bonds of financially distressed companies have often been top performing assets for many savvy investors.
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About Arik Kislin
Arik Kislin is a self-made real estate investor, developer and entrepreneur. Arik Kislin is a principal with Linx Industries, a diversified investment company which includes JetFLight International, a Private Aviation Charter and Management Company, The Gansevoort Hotel Group, and Ocean Blue Management. Mr. Kislin began investing in a financial services firm active in the distressed debt market which manages assets in excess of $2 billion. Arik Kislin is a member of the New York Friars Club.