I just finished Cringely’s The New Robber Barons.
It’s not as hard to do such a takeover as one might imagine. Section 404 non-compliance, for example, would probably violate the provisions of most senior debentures issued by many companies, often long before Sarbanes Oxley was even proposed. Imagine a scenario, then, where a robber baron buys or otherwise comes to control some of that senior debt. A Sarbanes Oxley violation would make it possible to call the debt, which if it can’t be immediately repaid would result in the company being simply handed over to the creditor with no regard for holders of common stock. THIS WILL HAPPEN.
It is a scary article. Cringely is a prescient writer who seems to be tapped into so many trends.
What I wonder though is how can I use the information in this article to my advantage. This spring I figured US gas prices would hit $3/gallon so I bought CononocPhillips stock. It doesn’t look like it will hit $3/gallon but my investment is is up 17%.
Now that I have read Crignely’s prognostication how should I change my behavior?