Signals liquidity strain or refinancing risk; demands wider margins of safety and faster thesis clocks.
Published: 2026-02-14
“The margin of safety is always dependent on the price paid.” — Benjamin Graham
Implications:
- Raises financing costs and can trigger covenant issues.
- Often precedes dilutive capital raises or asset sales.
- For net-nets, insist on deeper discounts and near-term catalysts before entry.
Checklist:
- Verify cash runway and debt maturities.
- Track subsequent events in filings for emergency financings.
- Revisit thesis after each quarter until the warning is removed.