[krishan]

Just been thinking about companies with debt and cash and had an idea. How about if you wanted to invest in a company with 100M MC and 100M in debt. The company's EV is half debt. Your normal position size is 5%. Instead of buying a 5% piece you buy a 2.5% piece to get a "normal" exposure to the equity piece. Conversely if a company has a 100M MC and 100M in cash, you buy a 10% piece (using leverage if necessary?) to get a "normal" exposure to the equity piece. I'm defining normal as a company with no debt, no cash where the MC = EV. Does this allocation strategy have any merit?

What about a broad based index fund using this strategy? Thoughts?

Krishan