Complete review of open positions and open limit orders in the fixed income space.

music selection:  “The End Of The Innocence” — Don Henley

One of the greatest wealth building techniques is to buy distressed bonds that are mispriced by the market.  When bonds lose their investment grade rating, most institutional investors become legally obligated to sell.  Thus results in severe price dislocations allowing retail investors to scoop up assets far below their intrinsic value.  Good deals are hard to find right now while times are good.  But soon, the credit cycle will turn and there will be billions of dollars of badly mispriced assets on the market.  Raise cash now to take advantage.  The following are my open positions and open limit orders in individual bonds.

032359AE1 – AmTrust Financial

This 6.125 coupon bond matures on 15AUG2023.  I originally purchased at 95 cents on the dollar.  I sold all but one of my bonds when the price was at 99.15 cents on the dollar.  This bond is a buy whenever it falls below 95 and a sell at prices above 99.  I expect many opportunities to churn this bond for some easy and low risk income.  I have a limit order open for 7 additional bonds at 05 cents.

075896AB6 – Bed Bath & Beyond

This 4.915 coupon bond matures 01AUG2034.  I hold 9 units, purchased 21MAY2019 for 76 cents on the dollar.  The bond is a buy up to 76 cents and is currently priced at 72.5125 (in buy range!)  I currently have a 313.88 unrealized capital loss and am down 92.74 after coupons.  I am targeting an early exit at prices above 95 cents.

12505JAA1 – CBL Associates

This 5.250 coupon bond matures 01DEC2023.  I hold 8 units, purchased 19OCT2018 for 83.7 cents on the dollar.  The bond is a buy up to 85 cents and is well in buy range at 72.0000 this afternoon.  I am down 936 in unrealized capital gains or 516 after coupons.  Like most of the bonds I buy at a discount, I plan to exit early at prices above 95 cents.

20367QAB3 – Community Choice Financial

This 10.750 coupon bond matures 15DEC2023.  The company went into reorganization and converted the bond to Payment In Kind (PIK).  I believe the bond is “money good” but it no longer trades.  Coupons are accrued but not paid until maturity.  I paid 75 cents on the dollar and expect to make a slow 20.44% annualized.

34984VAB6 – Forum Energy Tech

This 6.250 coupon bond matures 01OCT2021.  I hold 7 units, purchased 18JUN2019 for 90.5 cents on the dollar.  I expect 11.5% yield to maturity if held to maturity but expect to exit early for boosted retursn.  This bond is in BUY range up to 91 cents on the dollar.

708130AD1 – JC Penny

This 5.650 coupon bond matures 01JUN2020. I hold 8 units, purchased 19JUL2019 for 89.9120 cents on the dollar.  My yield to maturity is 19.16% and is a mortal lock to be “money good”.  This bond is out of buy range at 94.4670 but belongs on any watch-list up to 92 cents.

609453AG0 – Monintronics International

This 9.125 coupon bond no longer trades.  The company is in bankruptcy and bond holders were offered 2.5 cents per dollar cash or shares in the reorganized company.  I have elected shares.  Time will tell if the shares trade or have any value.  I am accounting for this so far as a 6,500 dollar loss (10 bonds times 65 cents on the dollar).

018772AS2 – Pyxus International

This 9.875 coupon bond matures on 15JUL2021.  I purchased 7 units for 87 cents on the dollar.  I expect a yield to maturity of 16.96% if held to maturity.  The bond is a BUY up to 88.5 cents and is buy range at a current price of 84.8500.

761519BD8 – Revlon

This 5.750 coupon bond matures 15FEB2021.  I purchased 9 bonds at 75.5 to 77.0 cents on the dollar between 5 and 16 JUL2019.  I expect 20.00% yield to maturity. This bond is a BUY up to 79 cents but is out of buy range at 91.3520.  Keep it on your watch list though!

912909AN8 – US Steel

This 6.250 coupon bond matures 15MAR2026.  I purchased 8 bonds for 87.4850 cents on 16MAY2019.  I expect 9.24% yield to maturity on a very safe bond.  I expect to exit early above 95 cents for a boosted return.  This bond is a BUY up to 89 cents, exactly today’s closing price.

07556QBR5 – Beazer Homes

This 5.875 coupon bond matures 15OCT2027.  I have a good till canceled limit order open at 89.5 cents.  Current pricing is 92.75 cents and I am waiting patiently for a fill.  Patience while stalking prey is the raptor way!

501797AL8 – L Brands

This 6.875 coupon bond matures 01NOV2035 and is issued by the parent of Victoria’s Secret.  The bond is money good and I have a good till canceled limit order open at 85 cents.  Current pricing is 88.3 cents or 3.88% above my bid.  I was able to buy this bond last year and flip for a quick gain in about 90 days.  The price fluctuates and is a good play as a swing trade.  Your “downside” from a fill at 85 is a 7.88% yield to maturity if you have to hold long term.  Pretty tasty.

Devour your prey raptors!

Update Distressed Bonds

Never miss another opportunity to devour prey!

2 thoughts on “Update Distressed Bonds

  • August 3, 2019 at 11:16 pm
    Permalink

    Ugh, I have some of the Monitronics too. I wonder how this will play out. I made the same election; stock. For 2.5%, I’d rather take my chances on the stock!

    Reply
    • August 4, 2019 at 9:21 pm
      Permalink

      It may surprise you but there will be a lot of 2.5% cash takers. The few institutional owners that are still allowed to hold or were unable to find a bid will mostly be forbidden from holding an equity stake. The underlying company has strong brands. I expect they will start shopping the company for a buyer once the bankruptcy paperwork is all executed.

      Reply

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