Risky Bonds Should Not Mean a Risky Portfolio
Because distressed-debt investing can be risky, this month’s update focuses on proper position sizing within a portfolio, plus some recommendations for investors new to this sector.
Distressed Investing
Beaming Up Bonds
We have found one bond among more than a dozen issued by these two newly merged companies that we consider well very protected from the financial perils that the new company might experience. And because of this, it has an extra high yield, which can lead to extra high profits.
Down Goes Distress… For Now
Right now the bond market is not sending very many distress signals. But if the mood shifts, we could suddenly have many more bonds trading at yields that make them appealing to investors with the appetite for high risk/high reward.
Finding Value in a Broken Deal
In the midst of the market tumult and a broken merger, this company’s bonds felt a sharp decline in price. For analyst Martin Fridson this distress has created a very appealing new opportunity.
How We Learned to Stop Worrying and Love Bankruptcy
For distressed-debt investors, knowing about bankruptcy is critical. In this month’s update, we will tell you how bankruptcy works, and explain why it’s important for bondholders to know the ins and outs of the process – and to realize huge gains when bonds emerge from a troubled state.
Profiting From the Remote-Learning Boom
This issue features of one of the largest and best-known online education companies in the world. The bonds declined 75% from their highs as the business stagnated in 2023 but now offer good value. As we detail in the analysis, these are speculative bonds with a meaningful chance of gain, a possibility of bankruptcy, and a real chance of loss.
A Hard Landing Could Lead to More Distress
There haven’t been many defaults in corporate bonds recently. But in the hard-landing scenario playing out for next year, there will be many more distressed bonds to choose from than there are now.
More Planes, More Profits
The issue will feature a prominent U.S. airline whose bonds trade at a steep discount. It’s a company with nearly 25 years of success and an industry-best customer-service record. Plus, we include an equity that provides some downside protection and lots of upside.
When Recession Strikes, Distressed Pickings Rise
As the economy begins to contract, the opportunities in distressed debt will become more numerous and appealing.
Shopping for the Home… From the Home
In this issue, we’ll examine one of the few solid internet companies that escaped the dot-com carnage. This online merchandiser has a capital efficient business model and almost 10 years of impressive growth, making this bond a bargain at the right price.