Security Analysis by Benjamin Graham and David Dodd was first published in 1934. It is a fundamental book for serious students of value investing.
To recapitulate, the authors have asserted that selecting fixed value investments is a "negative art" that involves rejecting bonds based on various criteria and then selecting from the rest. In Chapter 10, the authors recall this point from Chapter 6 that secured bonds are not necessarily safe based on the value of the pledged asset. Rather safety should be measured on the issuer's ability to fulfill its obligations. However, there are exceptions.The authors examine a few sets of bonds where it will be ok to base safety decisions on the pledged asset. One such case is when the pledged asset has alternative uses that can be sold independently. In another case, the asset could be readily converted into cash. Another exception category could be real estate bonds.
In the field of real estate bonds, the authors distinguish between real estate mortgages on single-family homes and mortgage bonds issued for special structures such as hotels and factory buildings. For the latter, the author emphasized analyzing such issues as a business. Meaning, that the earning power of the business should be studied to determine the issuer's ability to fulfill its principal and interest charges.
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