Is it advisable to buy a subsidiary of a highly levered parent company?

[opmi]

They probably will have figured out the most tax efficient means for the parent company to extract value from the subsidiary, especially if the parent and subsidiary are of different tax jurisdiction.

So if the parent is managed by what can be considered to be honest people, then it is unlikely for investors of the subsidiary to be surprised by any such negative developments.

The parent can extract more value by charging the subsidiary with higher fees, perhaps for corporate or licensing purposes. Or by getting the subsidiary to purchase good and services at slightly higher market rates. But generally, such related party transactions are supposed to be arms-length, and if it isn't, they have to explain their rationale. Not that any explanation is of use to opmi, of course.

The Kingboard Copper Foil thread is a very good case study.

I think following when 張國榮 buy or sell Kingboard, can make money...but not its subsidiaries.

Kingboard shareholder structure also make alignment of interest better for OPMI. I guess.