I sold another of my discounted bonds today.

music selection:  “Sound Of The Bell” — Veruca Salt

On 15JAN2016, I picked up the Weatherford 5.125 15SEP2020 maturity bond for 75.954 cents on the dollar.  I paid two dollars in commissions and 35.88 in accrued interest.  Today, I sold the same bonds for 95 cents on the dollar, paying 2.75 in commissions and collecting 26.19 in accrued interest.  During the holding period, I picked up 51.24 in additional interest from a coupon payment.

The trade was in force for 151 days and yielded 64.85% annualized.  This one benefited greatly from the recent run up in crude prices and a tender offer for early redemption.  I decided to take my profit now rather than wait until 2020 for the remaining five cents on the dollar.  All together, my portfolio of discounted bonds, including closed positions, is up $3,077 and has returned an additional $2,020 in interest.  I feel this has come with less risk and volatility than my long stock positions and options trades.  I’ll be looking for more deals on discounted bonds in the future.

Devour your prey raptors!

 

 

Update Discounted Bonds

Never miss another opportunity to devour prey!

4 thoughts on “Update Discounted Bonds

  • June 22, 2016 at 8:27 pm
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    Head Raptor – The bonds that you have go into bankruptcy, how long does it take to get your money back? Please keep up the great content. Jason

    Reply
    • June 23, 2016 at 1:43 am
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      Jason,

      Weeks, months, or even years. It moves at the “speed of law” and is beyond the control of the retail investor. It is definitely not a short term type of play. And you can only expect to get about 40 cents on the dollar (historical average). I’m thinking because of the depressed market, the oil and gas bonds I have in bankruptcy will pay closer to 30 cents on the dollar. I should still come out ahead.

      Reply
  • June 23, 2016 at 4:10 am
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    The Lizard King – Would your ever buy a bond (if it’s 10,15,20 cent on dollar) if it was looking like it would be going in bankruptcy? Thanks, Jason

    Reply
    • June 23, 2016 at 12:12 pm
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      I bought MPO at 13.6 cents on the dollar. It is now in bankruptcy. You have to look at the balance sheet and the assets and determine how much you think it will pay in liquidation. Obviously, that is more speculative and you shouldn’t bet the farm.

      Reply

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