In the May 9 Distressed Investing report “Cracking The Code,” we recommended purchasing Green Plains’ 2.25% bonds maturing March 15, 2027. We now recommend selling those bonds. In May, when we recommended them, the bonds were trading at $785, which equated to an annual return of just over 16%. We suggested pairing each bond with
This month’s recommendation reminds us of our very first recommendation in March 2023, when we wrote about Diversified Healthcare Trust’s 9.75% bonds. We believe that in both cases, investors were looking backward rather than forward, creating an opportunity for high, risk-adjusted returns.
Yesterday, August 27, Green Plains (Nasdaq: GPRE) announced that it had agreed to sell its 120 million gallon per year ethanol plant in Obion, Tennessee, for $190 million. This equates to an impressive valuation of $1.58 per gallon of capacity. Shares of GPRE rose 12% to $11.18 per share following the news. We recommend selling half
Many beaten-down bonds deserve to be beaten down and never to recover. A smaller number of issuers, also beaten down, do have the wherewithal to make good on their obligations and strengthen their balance sheets.
A noteworthy entrant to the distressed ranks is Xerox (XRX) – in the 1980s, the copier producer’s stock was one of the greatest performers ever, registering an astounding 4,500-fold gain in the 50 years through its all-time high on May 3, 1999. Xerox’s senior debt is now on the watchlist for downgrading.
In April, we recommended selling the bonds of this e-commerce business at $878 – which we had recommended buying four months earlier at $840. They have since fallen dramatically. In this report, we are recommending buying them back. And we explain why the price of the bonds has dropped and why we think it will rise again.
On February 13, we issued our Distressed Investing report A New Burst Of Life, in which we recommended purchasing Herbalife’s 4.25% convertible bonds due June 15, 2028. Today, we are recommending selling the bonds, to realize a return of 35% from our entry price. Our thesis for recommending the bonds less than five months ago
Innovations of the past few decades have created many outstanding opportunities in distressed investing. To ease the pain of distress, financial entrepreneurs created new procedures to reduce the cost of fixing broken balance sheets – all to the benefit of individual investors.
Today JetBlue Airways (Nasdaq: JBLU) announced a new round of cost cuts as travel demand remains sluggish. The company is reducing its schedule and ending service to certain markets. JetBlue CEO Joanna Geraghty indicated the company is unlikely to achieve its previously stated goal of a breakeven in operating margin this year. Since we recommended
The company whose bond we recommended in February and whose stock we are recommending in this issue has made a strong turnaround – plus, it has recently made three related purchases that should further help its profits… and share price.