Sears is a prime example of how hedge funds and private equity companies take over retailers and gradually bleed them dry for their own benefit. By Robert Kuttner and cross-posted from Huffington Post
Comment by tonytran2015:
Company directors usually hide the assets from shareholders making them selling out their shares cheaply to vulture funds. Vulture funds then control those target companies, delist them from the Stock Exchange, take away all profitable parts. Vulture funds then make contract for predatory loans to those target companies giving them just a bare chance of survival in the fairest weather for about 3 years. Vulture funds then refloat target companies by IPO’s on the Stock Markets as “revamped companies” but they are actually Zombie Companies.
The latter are financial traps for inexperienced Stock Markets investors. After 3 years, most Zombie companies would fail due to predatory loans from their own (Vulture Funds) floaters. As creditors, the Vulture Funds again would come in to take possession of most assets of Zombie Companies.
Investors should stay well clear of any “revamped company” floated by some Vulture Funds or Private Equities.
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