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Woke Wall St. - how to kill industries - ESG

jhblaze1

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Given my line of work, I think this topic is interesting and clearly very dangerous. Have you ever heard of ESG investing? Know anything about it? Seen any marketing blurbs about it when opening your brokerage account? It came up on an investor call today so it got me going.

ESG stands for Environmental/Social/Governance investing. It's quickly becoming all the rage on Wall Street and is every bit as big a threat to corporations and whole industries as government regulation. I work for a large buy side firm that manages a huge platform of CLOs. CLOs have been immune from ESG stupidity for a while, but it's creeping into our newest issue funds and is being pushed hard by investors. Our investors are institutional investors (banks, insurance companies, other funds, etc). These investors are usually some sort of pass thru to further investors and stakeholders. As our society continues to get more "woke", end investors are demanding that their fund managers be "woke" too. To that end, ESG is showing up EVERYWHERE.

ESG analysts rate various industries and companies based not solely on credit worthiness and yield prospects, but layer in the "wokeness" of the business. Gone are the days when a portfolio manager could fulfill his fiduciary responsibility to his investors by seeking max yield/return for a given risk profile. Now, because of investor demand or an assumption of the existence of such a demand, PMs are having to tweak portfolios to consider this utter f***ing nonsense. As such, some investors who could care less about woke faggotry, lose yield so that other "woke" investors in the shareholder pool can feel special about themselves.

So this is how companies and industries can be destroyed without even needing government stupidity. ESG is the wholesale divestiture of unsavory business from portfolios. Simply put, ESG chokes off capital to businesses, or assesses a non-ESG premium to lending rates such that access to liquidity and cap-ex funding becomes prohibitively and punitively expensive. We've seen this here, with banks/credit card processors not processing gun purchases. But ESG investing takes this to a whole new level where entire industries are excluded from a vast sea of readily available capital.

CLOs as you may or may not know, issue bonds in a structured finance transaction against a pool of "leveraged loans". In simple terms, a leverage loan is a speculative grade (i.e. non-investment grade) syndicated loan made by a pool of lenders to provide capital to these non investment grade companies. These are companies rated BB+/Ba1 and lower by rating agencies such as Moody's and S&P or Fitch. The lender pool is made up mostly of CLOs and other leveraged loan funds. A typical $500M CLO will issue about $300M AAA notes, $50-60M AA rated notes, $30ish M single A rated notes, $30M BBB notes, and 15-17M BB Notes. At the bottom of the capital stack is about 50M equity notes. This $500M is used to purchase about $500M in leveraged loans.

The 50M in equity is considered "first loss" as there is no credit protection. To juice the equity returns, the fund leverages about 10x over, so that is why we issue about $450M in rated notes. For each turn of leverage, the equity return doubles less the cost of capital in the structure above and expenses. The large $300M AAA class of notes is often issued such that is pays LIBOR plus ~1.3% spread. The most junior class of BB rated or sometimes B rated notes pays LIBOR plus 6.5-8.5%. The structure is set up such that the largest chunk of leverage is very cheap, getting more expensive as you go down the stack and the class size decreases. The aim is to get the weighted average cost of capital (or weighted average spread of the debt notes) to be somewhere around 2%. The $500M worth of leveraged loans that are purchased with the sales proceeds of the notes carry a weighted average spread over LIBOR of about 4%. The CLO then will use incoming loan interest payments per year to pay the interest on the Notes and keep the 2% excess spread to pass on to the equity class, after management fees and admin fees are paid.

It's really a brilliant structure when you stop and think about it. Say an equity investor wanted to give an asset manager $50M to invest in a pool of leveraged loans that paid an average all-in coupon rate of 5%. Absent any fees, the equity holder would be able to rely on a 5% annual return by investing in mostly BB and B rated loans. 5% in BB and B loans is MUCH higher than what they could get buy investing in a high yield bond fund. Moreover, the default rates in the leveraged loan asset class are significantly lower than the default rates in corporate bond paper. Recovery rates post default for a leveraged loan are around 70% vs 40-45% for corporate bonds. Clearly it's an attractive asset class due to both being "yieldier" and lower default rates/higher recoveries. But what if the equity investor could spend that $50M investing in the leveraged loan asset class but rather than get a 5% annual return, get a 23% annual return? The way this is achieved is by creating a highly (typically 10x) leveraged structure. This is why another $450M in debt is issued above the equity class. For every turn of leverage the equity investor can double his return minus the cost of the leverage. When you leverage 10x at 2% cost, the equity investor nets an additional 3% per turn of leverage: 9x3=18% plus his initial 5% = a 23% return based on the same $50M investment. Not only this, he gets a shit ton of protection via diversification because his $50M exposed him to $500M of credits, typically 200 companies across 30+ industries. Now his actual return will be a bit lower because the asset manager is charging about 4-6 million per year per CLO to manage, there are admin and legal expenses etc. But still a solid return and value prop typically around 17-18%.

Now, without all these CLOs (nearly $700 Billion currently outstanding CLOs) there aren't a lot of buyers for leverage loans. The leveraged loan market is about $1.2T so CLOs account for nearly 60% of the market. Speculative grade companies who need access to capital for things like dividend recaps and LBOs find attractive borrowing terms in the leveraged loan market vs issuing bonds. Lenders like them because leveraged loans require a senior secured first lien status backed by tangible collateral. Bonds are unsecured and lower in a companies capital stack and thus subject to significantly more risk to the investor/lender. In a leveraged loan scenario, a large investment back arranges the loan, but individual investment funds (CLOs and others) basically form a lending syndicate to fund the loan. These funds are de facto lenders and now have first lien claim status to the companies assets in a default situation, higher than any of the company's bondholders or other creditors. Leveraged loan lenders are only junior to taxes.

Until recently, a CLO manager's fiduciary responsibility was to buy an appropriately "yieldy" pool of levaged loans within the covenants of a CLO indenture. A number of simple statistical tests ensures the credit enhancements of the senior rated note classes is kept intact, and the structure is set up such that each subsequent class of notes has sufficient subordination beneath it to absorb losses in case of portfolio credit deterioration or major market disruptions like Covid. Each class is effectively "overcollateralized" such that a class will not become affected by losses unless the losses reach a certain threshold (the class "attachment point"). Typically the AAA class attaches at around 40% meaning that the 40% of the portfolio would have to default at 0% recovery before the AAA class lost a penny! Each lower class assumes the extra risk by getting a higher spread and everyone is happen. No AAA clo note has EVER defaulted (and actually this goes down to AAs), and there have only been a few losses all the way down at the Single B level CLO notes in history. Long before a default happens on a CLO note, a failure in an overcollateralization tests will force an accelerated maturity of the highest rated outstanding class. This usually cures the OC test failure and leaves behind a healthy but somewhat de-leveraged structure.

Now CLO managers are being pressured to incorporate ESG into the portfolios. These ESG rules get covenanted in the CLO indentures and become unbreakable rules. Entire industries and companies get excluded. Now remember, if it wasn't for CLOs (which make up about 60% of the leveraged loan market) there would be no lenders to fund these loans and the companies relying on this capital would lose access to that capital. You can see where this is going. Weapons manufacturers are often tops on the ESG black list. Regardless of how you feel about say "cluster bombs", esg says no way Jose. Nevermind that the last US manufacturer of these munitions stopped producing them in 2016. Regardless of how you feel about palm oil, it's a huge commodity and a legal business. But envrio nazis hate palm oil and almost all ESG blacklists include Palm Oil manufacturers. Add tobacco - even non tobacco companies who derive 50% of their revenues from tobacco sales/transport/packaging, semi auto civilian gun manufacturers, fossil fuels especially evil coal, the list goes on and on. If a liberal doesn't like it, you can bet it's going to show up on ESG black lists.

--continued below--
 

jhblaze1

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Now the snowball effect is crazy. An insurance company like Progressive or Varma, Liberty goes ESG. Insurance companies don't make their money on your premiums, they make it on their investments. They're among the biggest investors in CLOs along with banks. Banks go ESG. Now you can't get a big bank to buy your anchor AAA CLO note, and no insurers will fill in the mezz the deal doesn't get done. The deal doesn't get done leveraged loans don't get made. Leveraged loans don't get made these non investment grade companies lose access to critically needed liquidity. Leveraged loans don't get made LBO M&A activity suffers. M&A activity suffers then private equity firms get roasted. Now the ESG proponents and do-gooders insist everything will be fine. New green/responsible/liberal businesses will ultimately need leveraged loans and will (without saying it) take the place of non ESG "bad" borrowers. In short, you choke off capital to "bad" non liberal "woke" companies, effectively kill them, and replace them with green/responsible ESG companies.

We're a credit based economy a lot more than people realize. People can hate wall street all they want but most people don't know jack shit about how things actually run. Everything runs on credit not "stocks". When you deny credit based on do-gooder virtue signalling liberal BS you can effectively destroy entire industries you don't like, pat yourself on the back as a good liberal and you don't even need overzealous government regulation to do it. As the ESG industry black list grows, where does it end? What if enough enviro nazis convinces fund managers that beef farming is bad enough to make the ESG blacklist? It's an incredibly slippery slope and fund managers are happily advertising how eager they are to go woke, to impress and court their institutional investors who insist on it, who are insisting on it because an army of Karen Soccer Mom 401K CNN watchers insist on it along with all the state gov't pension funds etc. This is marketed to Karens so they can feel good about what's in their portfolio but the real agenda is to cripple/gut/kill entire industries that the AOC's of the world find to be "icky".
 

jhblaze1

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That is phucked.

Hopefully they aren't pulling this shit with my 401k funds.
they are......dipping the tip in at least.

Now it's largely voluntary but the pressure is immense. A lot of companies will launch ESG funds to cater to these dildos and also pat themselves on the back as being a woke company but still manage other non ESG funds. The trend though is for "whole house" ESG where fund companies will start to only do ESG or some level of ESG and shift their holdings over time to woke-a-liciousness.

If I ever make it to portfolio manager (unlikely) I would start my own firm investing in only the yieldiest shit with a preference for offensive industries/companies. Maybe start a hedge fund called SuckMyWoke Capital Management LLP and invest in nothing but land mine manufacturers, whiskey distillers, cluster bomb builders, palm oil and tobacco companies and gun makers.
 

67ray

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What has happened with media companies and what is happening in social right now will happen to every industry. There will be right leaning and left leaning versions of companies in all markets. What you have here is just that the business of high finance is starting to divide itself similarly.

One saving grace is that finance industry is motivated by nothing but greed. They don't really believe the woke shit they just want anything that will make them more money.
.
 

bauer

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they are......dipping the tip in at least.

Now it's largely voluntary but the pressure is immense. A lot of companies will launch ESG funds to cater to these dildos and also pat themselves on the back as being a woke company but still manage other non ESG funds. The trend though is for "whole house" ESG where fund companies will start to only do ESG or some level of ESG and shift their holdings over time to woke-a-liciousness.

If I ever make it to portfolio manager (unlikely) I would start my own firm investing in only the yieldiest shit with a preference for offensive industries/companies. Maybe start a hedge fund called SuckMyWoke Capital Management LLP and invest in nothing but land mine manufacturers, whiskey distillers, cluster bomb builders, palm oil and tobacco companies and gun makers.
I’ve always wanted to start a vice fund solely to annoy the wokes. We’ll only invest in guns, tobacco, oil, nuclear, etc etc. Basically if it annoys the wokes we’ll invest in it (heavily). It’ll be an inverse woke fund with a -1 correlation to wokeness. Icing on the cake will be when we dramatically outperform the wokes
 

Tinkermatic

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That was a long rant. People are free to invest in whatever they want, right? So if some people want to be sure the companies they invest in are inline with their “wokeness”, so be it.

I’m somewhat familiar with ESG and it seems similar to the triple bottom line many companies are looking to adhere to, just applied to investing, no? Things change. People are more (hyper?) aware of negative externalities and their effects on communities and the planet. If their portfolio suffers but they’d prefer the mutual fund they invest in doesn’t include bonds from the baby seal clubbing company, or your aforementioned landmine and cluster-bomb manufacturers (Raytheon is poised for gains after their recent merger) is it really something to be upset about?

Edit-Maybe upset isn’t the right word. I’m also not an investor and you’re obviously far more knowledgeable than me, could be my naiveté. Live and let live?
 
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graphite

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WOW...thanks for the download! This reminds me of the days when all the virtue signalling institutions were pulling out their investments in South Africa because of apartheid.

And I remember a little while after that, the company I worked for at the time changed their 401k and the HR rep giving the presentation on the new funds available was touting the "Socially Conscious" fund and everybody looking at the summary report of how the funds compared against the averages could plainly see it was the dog of the family.

Nature abhors a vacuum, so once this ESG crap starts growing and getting more publicity, my money is on someone, maybe you OP like you indicated, to come along and decide to start a vice investment strategy as a response to the woke strategy.
 

snax

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If I ever make it to portfolio manager (unlikely) I would start my own firm investing in only the yieldiest shit with a preference for offensive industries/companies. Maybe start a hedge fund called SuckMyWoke Capital Management LLP and invest in nothing but land mine manufacturers, whiskey distillers, cluster bomb builders, palm oil and tobacco companies and gun makers.
Let me know when to send the check
 

paul73

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If I ever make it to portfolio manager (unlikely) I would start my own firm investing in only the yieldiest shit with a preference for offensive industries/companies. Maybe start a hedge fund called SuckMyWoke Capital Management LLP and invest in nothing but land mine manufacturers, whiskey distillers, cluster bomb builders, palm oil and tobacco companies and gun makers.
but you can`t yield much is the leftist crowd would continue to start a rabid cancelling campaign against each and every non-compliant entity, right? social economics, it is just a time of change now, the pendulum went almost to the extreme, so, eventually it should start a swing back. oor it will continue going full retard until it blows the market.
then, the woke and worty businesses properly affiliated with a new regime will be bailed out from taxpayers piggy bank, and rest evil ones will be sacrificed to scare the rest of what is left of non-compliant parties.
 

Dennis in MA

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I believe in snap-back. A pile of geniuses decide that they're gonna invest via ESG instead of just fiduciary responsibility. It actually COSTS the eventual clients money and the eventual clients sue their asses off. And win. And no one talks of this again.

Because the problem is: There is no set definition of ESG. OK, so RJR Tobacco (do they even still exist?) - probably not ESG. Conventional power generation??? Nope. But what about Tesla??? Think of all of those waste products of battery mines. How about GE??? Do you really want a company that makes machine guns for attack helicopters in your portfolio??? But these same helicopters rescue save and protect people across the world, so. . . maybe.

How about Frito-Lay???? You wanna go ESG, how about the social cost of all them fatties out there??? Let's dump Lenin and Jerry's in there as well. (Well, they'll probably get a select pass and the rest of the frozen fat-and-sugar-filled-diary-dessert-category gets ESG'd out of existence.)


People really like their causes. But they like their $ more. And when the rubber meets the road, they'll pick their $. They always do.
 

paul73

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Because the problem is: There is no set definition of ESG.
there is. you just not used to how socialism works, yet. it is all about compliance and uniformity with a general line of the party.
you say only what is allowed to say, and it is changing when leadership is allowing it to change. whatever. it is what it is, now, they got on top and it will have to take its toll.
 

DaveL.

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I believe in snap-back. A pile of geniuses decide that they're gonna invest via ESG instead of just fiduciary responsibility. It actually COSTS the eventual clients money and the eventual clients sue their asses off. And win. And no one talks of this again.

Because the problem is: There is no set definition of ESG. OK, so RJR Tobacco (do they even still exist?) - probably not ESG. Conventional power generation??? Nope. But what about Tesla??? Think of all of those waste products of battery mines. How about GE??? Do you really want a company that makes machine guns for attack helicopters in your portfolio??? But these same helicopters rescue save and protect people across the world, so. . . maybe.

How about Frito-Lay???? You wanna go ESG, how about the social cost of all them fatties out there??? Let's dump Lenin and Jerry's in there as well. (Well, they'll probably get a select pass and the rest of the frozen fat-and-sugar-filled-diary-dessert-category gets ESG'd out of existence.)


People really like their causes. But they like their $ more. And when the rubber meets the road, they'll pick their $. They always do.
There's nothing to sue about though. Investors receive a prospectus, PPM, marketing docs outlaying their ESG investment criteria and make the choice to invest or not. They agree to the direction the managers are taking with no guaranty of performance. An investment manager's responsibility is to manage capital in accordance with their investment policy, not to guaranty a return.
 

jkelly1229

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That's a lot of words but do you mean like the stupid adds you see for democrat etfs and republican etfs?

I can't see how that's a good idea
 
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they are......dipping the tip in at least.

Now it's largely voluntary but the pressure is immense. A lot of companies will launch ESG funds to cater to these dildos and also pat themselves on the back as being a woke company but still manage other non ESG funds. The trend though is for "whole house" ESG where fund companies will start to only do ESG or some level of ESG and shift their holdings over time to woke-a-liciousness.

If I ever make it to portfolio manager (unlikely) I would start my own firm investing in only the yieldiest shit with a preference for offensive industries/companies. Maybe start a hedge fund called SuckMyWoke Capital Management LLP and invest in nothing but land mine manufacturers, whiskey distillers, cluster bomb builders, palm oil and tobacco companies and gun makers.

I would think the next big push will be to make sure default investments are ESG.

Oh you CAN choose what you invest in but if you don't make a choice they can use the default option. This puts more weight behind it without removing a choice. If some places have their default 401K option as a money market fund or some other poor return option its not like an ESG will do that much worse it will just have a higher risk premium because it can easily go down.
 

Dennis in MA

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there is. you just not used to how socialism works, yet. it is all about compliance and uniformity with a general line of the party.
you say only what is allowed to say, and it is changing when leadership is allowing it to change. whatever. it is what it is, now, they got on top and it will have to take its toll.

But but but but but. . . . their definition changes over time. Just like what is ray-sis. Suddenly, the only thing that is truly ESG is some fat patchouli-smelling lesbian's organic hemp farm in the San Joaquin Valley. They keep moving the sticks. And I think that's great. Because the further they go, the more damage, ultimately, they do to their cause. Humans can't help it. They'll fight teh same fight over and over even years after they've already won.


There's nothing to sue about though. Investors receive a prospectus, PPM, marketing docs outlaying their ESG investment criteria and make the choice to invest or not. They agree to the direction the managers are taking with no guaranty of performance. An investment manager's responsibility is to manage capital in accordance with their investment policy, not to guaranty a return.

I'm not talking about some dolt buying an ESG fund. I'm talking about the pervasiveness of it taking over things like pension funds and actively-managed mutual funds that have no ESG bearing. THAT you get sued for. Not for running an ESG fund. The OP is claiming ESG is getting pervasive. It WILL affect returns. And that WILL cause investors to sue. ESG is NOT fiduciary or prudent-man, unless some court wants to decide that those terms will be changed. . . at the peril of the entire financial industry within the US if not the world.
 

paul73

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But but but but but. . . . their definition changes over time. Just like what is ray-sis. Suddenly, the only thing that is truly ESG is some fat patchouli-smelling lesbian's organic hemp farm in the San Joaquin Valley. They keep moving the sticks. And I think that's great. Because the further they go, the more damage, ultimately, they do to their cause. Humans can't help it. They'll fight teh same fight over and over even years after they've already won.
well, a damage can only be perceived as damage if system allows, otherwise it is called 'progress'. anyway, i am a pessimist when it comes to politics, so, will see. may be things will settle themselves somehow, eventually.
 

new guy

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The issue is that this shit gets trendy at the board level and it spreads that way. The other thing is that big corporations will require it of their vendors, so service providers and vendors that might have skipped it get pressured into playing along.

It’s one of the topics du hour at my company (prof services) but it hasn’t really taken off yet - mainly because clients haven’t demanded yet, they’re only starting to bring it up. A formal policy, some new (but light processes), and a little bit of attention on the corporate side and we’re done, but it still sucks.
 

jhblaze1

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That was a long rant. People are free to invest in whatever they want, right? So if some people want to be sure the companies they invest in are inline with their “wokeness”, so be it.

I’m somewhat familiar with ESG and it seems similar to the triple bottom line many companies are looking to adhere to, just applied to investing, no? Things change. People are more (hyper?) aware of negative externalities and their effects on communities and the planet. If their portfolio suffers but they’d prefer the mutual fund they invest in doesn’t include bonds from the baby seal clubbing company, or your aforementioned landmine and cluster-bomb manufacturers (Raytheon is poised for gains after their recent merger) is it really something to be upset about?

Edit-Maybe upset isn’t the right word. I’m also not an investor and you’re obviously far more knowledgeable than me, could be my naiveté. Live and let live?


wasn't really a rant. Was sharing some industry knowledge and how wokeness is seeping into the capital markets and the potential negative impacts of that.

The problem is when the choice isn't a choice anymore. When 'non-woke' companies can't access capital anymore. When you can no longer invest in mutual funds simply to seek the highest possible return but can only choose mutual funds that invest in liberal companies. It's a very slippery slope. Amazon/Google/Apple can de platform Parler and stifle wrongthink.....the cap markets can deplatform entire industries via ESG.

To be fair, not all ESG is bad. My firm simply will not touch the private prison system. We (as a firm) and I personally think private prisons are gross. My firm didn't need investor/ESG pressure to blacklist that grotesque industry. We also don't invest in cluster bomb manufacturers, as a rule.

The point is when enough brainwashed CNN watchers decide an industry is "bad" it can reach a critical mass and end up in ESG black lists. What it it's beef farming? Sure no one cares if Seal Club Corp loses access to capital but with AOC types wanting to ban cow farming cuz farts, you can see the potential for danger, even if it's far off. The criteria aren't necessarily objective, or even rational, like they would be in a purely business and fiduciary sense where the objective is to make money.
 

jhblaze1

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but you can`t yield much is the leftist crowd would continue to start a rabid cancelling campaign against each and every non-compliant entity, right? social economics, it is just a time of change now, the pendulum went almost to the extreme, so, eventually it should start a swing back. oor it will continue going full retard until it blows the market.
then, the woke and worty businesses properly affiliated with a new regime will be bailed out from taxpayers piggy bank, and rest evil ones will be sacrificed to scare the rest of what is left of non-compliant parties.
this is a good point.....if enough of these "bad" industries get cancelled it would be hard to get yield without shorting them. Some industries like oil aren't going away for a long time though. The whole world can hate oil all they want but until they stop heating their houses with it, packaging all their useless shit in plastics etc the demand remains whether idiots realize/like it or not.

I can't wait for the woke conundrum looming when ESG funds are trying to invest in electric vehicles but divesting lithium mining companies. [laugh]
 

Tinkermatic

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wasn't really a rant. Was sharing some industry knowledge and how wokeness is seeping into the capital markets and the potential negative impacts of that.

The problem is when the choice isn't a choice anymore. When 'non-woke' companies can't access capital anymore. When you can no longer invest in mutual funds simply to seek the highest possible return but can only choose mutual funds that invest in liberal companies. It's a very slippery slope. Amazon/Google/Apple can de platform Parler and stifle wrongthink.....the cap markets can deplatform entire industries via ESG.

To be fair, not all ESG is bad. My firm simply will not touch the private prison system. We (as a firm) and I personally think private prisons are gross. My firm didn't need investor/ESG pressure to blacklist that grotesque industry. We also don't invest in cluster bomb manufacturers, as a rule.

The point is when enough brainwashed CNN watchers decide an industry is "bad" it can reach a critical mass and end up in ESG black lists. What it it's beef farming? Sure no one cares if Seal Club Corp loses access to capital but with AOC types wanting to ban cow farming cuz farts, you can see the potential for danger, even if it's far off. The criteria aren't necessarily objective, or even rational, like they would be in a purely business and fiduciary sense where the objective is to make money.

Yeah, forcing choices on people is decidedly not great and I can absolutely see where there’s potential for future issues. “Wokeness” isn’t going away unfortunately. I can see it leading to cancel culture as well. “JHBlaze’s firm invests in securities that support the bombing of babies” simply because you offer investment options in non-ESG securities.
 

AHM

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If I ever make it to portfolio manager (unlikely) I would start my own firm ... Maybe ... invest in nothing but land mine manufacturers, whiskey distillers, cluster bomb builders, palm oil and tobacco companies and gun makers.
Regulated by SEC or ATF?
Asking for the Big Money men...
 

Rye

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Sounds like a CCP plan to undermine or politicize foreign competition.

No it's actually part of a series of steps towards global totalitarianism. Along with removal of property rights, which will be coming (see Agenda 2021 and 2030). Gun rights is underway. Food and supply chain. Energy consumption. Great reset will take all of your savings. Social scores for individuals and absolute surveillance state.

If anyone ever thought this stuff is a conspiracy theory...

View: https://www.youtube.com/watch?v=lBBxWtKKQiA




The Davos/Jackson Hole/Bilderberg crowd is fully engaged.
 

FiremanBob

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One could argue that ESG companies are set to benefit from their cozy relationships with the Democrat party in the form of federal contracts and subsidies. But it's a weak argument considering that even with all the subsidies, these companies have an overwhelming track record of financial failure.

BTW, I was involved in the creation of the first leveraged syndicated loan sold to institutional investors other than banks, about 20 years ago.
 
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