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Welcome to the major leagues of debt. Collateralized debt obligations, almost always referred to as a CDOs, are horrendously
complicated deals that often leave anyone without a MBA wondering what was put into these CDOs.
The first thing to
understand about bonds, (aka debt) is that bonds are often backed by something else. Think about your home mortgage. If you
don't pay your mortgage, the bank can take the house. You end up homeless, and the bank sells the house to pay off the rest
of that mortgage. There is something "backing" that mortgage; something lender can fall back on, if you don't pay your bills
like a good human being. That's called collateral.
CDOs are one flavor of an entire sector of investing called structured
finance, and they are also backed. CDOs, in the simplest concept, are just bonds backed by something else. In most cases,
a CDO is backed by a collection of various types of debt. CDOs can be home mortgages, or other types of debt like credit cards,
auto loans, and personal loans. Most of these types of debt are usually considered a bit more risky and they don't have the
backing that a home loan does. So, if you think it through, you can imagine that CDOs are usually considered a risky investment.
To take a step further, understand that CDOs have multiple flavors within each CDO. These flavors are called tranches. If you've taken French, you might recognize the word, it means "slice" or "portion." Each slice of that CDO you invest in is a little different and carries different amounts of risk.
You could invest in the lowest risk tranche of the CDO, which would
provide you lower risk. But, you don't get a good return on that investment. Or, you can be the heroic adventurer of bonds
and invest in the lowest-grade tranche of the CDO. You'll make an amazing return, but if the economy even looks at you wrong,
you might lose the entire investment.
CDOs aren¿t easy, and are almost always invested in by mutual funds, insurance
companies and hedge funds. As an individual investor, you will probably not come across a CDO you can participate in.
Home / Markets / Industries / Technology
Thursday, July 10, 2008
William Blair & Company Initiates Coverage of Rubicon Technology, Inc. With Outperform Rating
Comtex
CHICAGO, Jul 10, 2008 (BUSINESS WIRE) ----William Blair & Company initiated research coverage of Rubicon Technology, Inc. (Nasdaq:RBCN) ($16.68) with an Outperform rating and Aggressive Growth company profile. Rubicon develops, manufactures, and sells monocrystalline sapphire and other crystalline products used in light-emitting diodes (LEDs), radio frequency (RF) integrated circuits, blue laser diodes, optoelectronics, and other optical applications.
Analyst Jeff Rosenberg estimated that the company would earn $0.46 per share in 2008 and $0.68 per share in 2009.
"Sapphire is a critical material enabling the production of components in multiple high-growth markets," Rosenberg said. "The majority of Rubicon's products are used in the production of LEDs, a market we expect to grow 20% annually over the next five years as LEDs are revolutionizing a growing number of lighting applications. Increased sapphire demand is also emanating from the RF component market, where silicon on sapphire (SoS) technology is gaining share from incumbent solutions in the cell phone market."
William Blair & Company, L.L.C. has received compensation for investment banking services from the company within the past 12 months, or expects to receive or intends to seek compensation for investment banking services in the next 3 months.
William Blair & Company, L.L.C. was a manager or co-manager of a public offering of equity securities within the prior 12 months.
William Blair & Company, L.L.C. is a market maker in the security of this company and may have a long or short position.
William Blair & Company, L.L.C. (www.williamblair.com) is a Chicago-based investment firm offering investment banking, asset management, equity research, institutional and private brokerage, and private capital to individual, institutional, and issuing clients. Since 1935, we have been committed to helping clients achieve their financial objectives. As an independent, employee-owned firm, our philosophy is to serve our clients' interests first and foremost. We place a high value on the enduring nature of our client relationships, the quality of our products and services, and the continuity and integrity of our people.
For important disclosures and information regarding the firm's rating system, valuation methods and potential conflicts of interest, please visit: http://www.williamblair.com/Pages/news_story_dept.asp?uid=1394&depID=4
Additional information is available upon request.
SOURCE: William Blair & Company, L.L.C.
William Blair & Company, L.L.C. Tony Zimmer, 312-364-8611 tzimmer@williamblair.com
Copyright Business Wire 2008
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