Book review: Renditenperlen aus dem Scherbenhaufen
Disclosure: One of the authors did send my a copy for free.
This (German language) book is a very unique book. It only deals with so-called Hybrid bank capital which clearly could be called a “distressed asset class”. Hybrid bank capital before the financial crisis was a “win-win-win”: Banks liked it because they could replace expensive equity capital and buy back shares. Regulators gave happily credit for it because the banks told them that if there would be trouble, those instruments would behave as equity. Investors were happy, because the banks told them that if there is trouble, the bonds will always pay because they were bonds.
Well, after the financial crisis, it was suddenly “loose-loose-loose”: The banks did not get equity credit anymore, the regulators were pissed of and a lot of bond investors were suddenly owning very equity like investments.
“Renditperlen aus dem Scherbenhaufen” is a collection of case studies about a couple of those hybrid bonds which traded at very attractive levels at various points in times. The special thing about this book is that it is written by individual investors which are active on at least one of the many German internet message boards. Nevertheless (or because of this ?), the case studies are better quality than anything you will ever read in analyst reports, newspapers etc.
There is a lot of extremely valuable knowledge in the book plus a lot of background about the capital structure of banks. When the book was released, some of the case studies were still “active” and generated very attractive outcomes since then.
For beginners, it is maybe a little bit too detailed, but for investors which like to increase their circle of competence, it is a must read in my opinion. Also for anyone wanting to buy a banking stock, this book will give a lot of insight how the balance sheet of a bank works. The only drawback is that it is only available in German.
Edit: The autors asked me to set a direct link to Amazon. As I do almost anything for a free book, here it is:
And no, I don’t get any money if you click the link and buy….