How to Profit on a "Bankruptcy Wave" Hitting Markets Hard
Just last week, ATM maker Diebold Nixdorf, Inc. (DBD) filed for chapter 11 bankruptcy, citing more than $2.66 billion in debt and inadequate cash flow to make any further interest payments on its loans and bonds.
They aren't the exception this year. Frighteningly, they are the norm.
Bankruptcies in the U.S. are rising at an alarming rate. So far in 2023, through the end of April, S&P data shows there have been 236 corporate bankruptcies recorded. That's a 216% increase over the number of bankruptcies recorded last year over the same period. A just released UBS study shows bankruptcies in the U.S. worth $10 million or more, year-to-date, had a rolling average of about 8 per week.
Obviously, this is going to have a knock-on effect on markets. But with bankruptcies exploding across the U.S. and companies shutting down altogether or attempting radical restructurings, one sector will suffer the consequences across the board more than any other - commercial real estate.
Companies defaulting on property leases, along with creditors selling office buildings and real estate assets into an already depressed commercial property market, is weighing heavily on an already underwater asset space.
With another wave of property downgrades, grossly marked-down sales, and abandoned buildings and sites on the way, we could even be looking at another bank crisis as the banks that hold those mortgages are forced to cope with the depreciation of those assets. And of course, all other sectors tied to commercial real estate will implode along with them.
There is, as always, a way to avoid the pain here, protect yourself, and make money targeting the sectors and stocks that are going to get hit hardest. And I have the perfect place for you to start. Full Story »
