If you believe in buying stocks, you believe in the American Dream. In a few case some people started with very little and ended up controlling vast conglomerates and Ling is one of those few exceptional cases. James Joseph Ling or Jim Ling started as an electrical contractor investing $2,000 of his own money and controlled the 14th largest company in the US . LTV or Ling-Temco-Vought was headquartered in the LTV Tower in Dallas, Texas. As one of the largest conglomerates in the 1960’s, Jim Ling was an important business person in Dallas and around the US, showing what could and can be done. The company started in electrical contracting the Ling name; began to consolidate other electrical companies across the US, then bought Temco which was in the aerospace business and added Wilson Sporting Goods, a Meat Packaging Company, Jones&Laughlin or J&L a major steel making operation. In the 1960’s and 1970’s conglomerates were considered a good thing to increase shareholders’s value.
The book Ling by Stanley H Brown published by Bantam Books, NY, 1972 outlines the rise and fall of Mr. Ling and subsequent rise to his next conglomerate. Mr. Ling made very good use and knowledge of using bank credit and bridge loans to convert to equity to restructure companies to sell public securities which pushed up the stock price of LTV to continue doing it again. The problem with many organizations is the level of debt and when others get worried. Mr. Ling had the company pay for most of his expenses and tied his shares which at the time was the largest shareholder to pay for other ventures. When the debt levels were reaching too high in the eyes of Wall Street, the price of the stock fell and that correspondingly made more worried. Eventually the Board shuffled Mr. Ling towards the door and out, but the assets of the company were eventually sold. For a while, Mr. Ling was on the Boards of major institutions such as Dallas Cowboys, universities, hospitals and other good works for the Dallas area.
Linking to dividend paying stocks, debt is one of those variables which Wall Street will load up on companies and then when something changes, complain companies have too much debt and need to sell assets. The problem of course is the assets are not liquid or take time to sell and need the correct conditions to get the best price or shareholders suffer. When you buy your shares, examine the debt levels and what is too high and what is good. As long as the company is profitable and can easily manage its debt and return money to shareholders, then you have few worries. If the debt is dependent on the subsidiaries generating very good returns, remember the economy moves in cycles.
There are more questions than answers, till the next time – to raising questions.