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!