The equity cushion myth: What the WeWork saga can teach us

As investors, we love margins of safety. It gives us confidence that companies can overcome challenges and therefore confidence to buy or hold onto investments when times are tough.  Sometimes, bondholders will say that a large 'equity cushion' is a margin of safety.  The interplay between liquidity and economic growth An easy way to think of the equity cushion is how much the equity market loves the company in question. Of the total valuation of the company, how much is equity versus debt? The theory goes that if a company has a significant amount of equity value relative to it...