Update CUSIP: 708130AD1

music selection:  “Limelight” — Rush

I purchased the 1JUN2020  maturity 5.650 coupon JC Penny bond on 19JUL2019 for 89.9120 cents on the dollar.  If held to maturity, the expected yield is about 19.16%.  I hope to do better by selling early and capturing my capital gains.  I have a good till canceled order open at 97 cents on the dollar.

I have noticed that the bond has become range bound.  It recently had bids above my ask (the bid/ask on bonds are not necessarily firm offers and may be an “expression of interest”).  But the bonds have also traded recently below 93.  I am updating guidance.

BUY CUSIP 708130AD1 up to 93; sell above 97.

Buying today at 93 would produce a 17.84% yield to maturity, which is a very good return for just waiting on short term capital gains that are nearly a mortal lock. There maybe two to three opportunities to flip this bond for spectacular short term gains.

Devour your prey raptors!

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Update JC Penny bond – CUSIP 708130AD1

Never miss another opportunity to devour prey!

2 thoughts on “Update JC Penny bond – CUSIP 708130AD1

  • October 11, 2019 at 8:43 pm
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    JCP is probably doomed in the long run, but these short-term bonds appear to be money-good. Makes me wonder if there is a theme here – if the long duration bonds of a declining company are steeply discounted, then that would be expected to drag down the short duration bonds proportionally, even if the cash is sitting in the bank. This would be an arbitrage opportunity that I would be surprised to see pass unnoticed.

    Either that or the market’s odds of a surprise bankruptcy / default are higher than yours.

    Reply
    • October 11, 2019 at 9:33 pm
      Permalink

      You can always be “Wrong” about a bond. Thus, diversification remains essential!

      Reply

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