The last of my money good bonds sold.
music selection: “Midnight Blue” — Lou Gramm
I have had a limit order open to sell RCII at 95 cents on the dollar for some time. It cleared market today. On 15SEP2016 I bought two of the 4.750 coupon 1MAY2021 maturity Rent A Center (RCII) bonds at 85 cents on the dollar. I paid 9 dollars in commissions and 35.68 in accrued interest.
Today, I sold the bonds at 95 cents on the dollar. I paid 9.75 in commissions and received 47.24 in accrued interest. All told, the trade was in force for 619 days and yielded 14.54% on an annualized basis.
I no longer have any discounted bonds in the portfolio that are likely to be ‘money good’. I have some shares and warrants from liquidation proceedings in Erikson Aviation, Energy XXI, and Midstates Petroleum that might eventually be worth something but I am expecting nothing. The closed positions (26) returned a simple annualized average of 80.74% on 10,794 in profits. The four losing positions have losses of 1,930.78.
I am not currently looking at any new discounted bond positions. The spreads versus the 10 year Treasury are really tight. That is going to spell disappointment for a lot of bond investors. The cycle always comes back around and I will get a better interest rate in the future. Probably after there is a financial shock to the system that reverses market mania.
Devour your prey raptors!