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What Bonds Do When No One Is Watching
Stocks dropped 10% over a four-week period in February and March. As is usually the case, the performance of bonds didn’t capture quite as many headlines. But their behavior as equities sank is worth examining – especially by investors who don’t know about the benefits of distressed bonds.
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Clear Skies Ahead
Since we recommended this company’s bond a year ago, the company has improved its performance, and the bond, still a year out from maturity, is trading near face value, having increased in price by 24%. This month, we are adding the shares to the portfolio.
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A Possible Turning Point For Distressed Debt
Tight credit isn’t the only factor driving the Distress Ratio’s rise and fall. But it’s a powerful one that’s likely to keep making it harder for struggling companies to refinance their maturing debt in coming months. It all adds up to a likelihood that distressed-debt investors will have a significantly wider array of bonds to choose from before very long.
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A New Burst Of Life
This nutrition company was the focus of an epic battle of two investment titans. Since that dispute ended, shares have been up and down – now creating an opportunity to buy the company’s bond at a very large discount.
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Distressed Bonds Outpaced S&P 500 In 2024
The total return of the average distressed bond exceeded 30% in 2024, beating the S&P 500 Index’s total return, which was well above its own historical average, at 25%. Still, with many big losers in that average, picking the right bonds is essential with distressed investing.
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A Nail-Biting Sequel
High-yield bonds often predict the direction of their companies’ associated stocks a few months in advance. We’ve taken advantage of this phenomenon with three bond recommendations followed by the same companies’ shares. And in this issue, we’re doing the same thing…
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Rising From The Ashes
First a supply-chain bottleneck, then a warehouse fire, sent this hugely popular, non-brick-and-mortar company’s revenue plunging. It has fought its way back and now finds itself on solid ground once again.
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Distressed Bonds Go Their Own Way; Plus a Sell
When interest rates go up, bond prices go down. Most segments obey that rule, by falling in price, as the benchmark 10-year Treasury yield rose. But not distressed bonds.
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Bonds Lead Stocks Out of Distress
In this issue, Marty Fridson details an opportunity to buy the common stock of a company whose bonds he previously recommended.
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Sell Alert: Half position of Peloton Interactive (PTON)
With shares trading up more than 100% from our entry price, we are recommending selling a half position in Peloton Interactive (Nasdaq: PTON). In our initial report on Peloton, “A Change of Gears,” dated October 11, 2023, we recommended purchasing Peloton’s 0% coupon bonds coming due February 15, 2026. At the time these bonds were