If the supply of distressed bonds increases, the prices of distressed bonds will likely decline. This suggests some bargains will become available for discerning, patient investors. We’ll be carefully looking over the distressed merchandise to generate profitable recommendations.
The bond we are recommending this month was issued by a spinoff technology company that is the leading player in a growing industry. Now under new management it is doing the right things and beginning to turn the company around.
In Distressed Investing’s December 2024 issue “Rising From The Ashes,” Marty Fridson and his team recommended buying QVC’s 4.375% bond maturing September 1, 2028, then at $840, up to a price of $860. The bonds currently trade for $878, up 4.5% from the entry price. We liked QVC’s business –- which had been improving –
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.
Mutual fund cash levels have historically been one of the best contrarian indicators of where the market is headed… one that’s still well worth tracking today. And right now, asset managers are holding their lowest levels of cash in history – meaning they think the market is headed higher.
Today we’re turning over the entire issue to readers. Over the last few weeks, Porter has written about a few topics that have generated more feedback than usual – on distressed investing, Trump’s economic policies, and more… Plus, some fishing photos.
Devastating as the recent stock market decline is – particularly after two straight years of 20%+ returns – a real downturn in the financial markets feels a whole lot worse, says our Director of High Yield Marty Fridson. The late 1970s/early 1980s was a bond market apocalypse, he says.
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.
Best known as a master in the field of high-yield bonds, today Marty Fridson shares insight into how he selects distressed equities – which are helping drive the total return of his Distressed Investing advisory higher.
Bond investors can earn even more than stock investors during market panics – while taking far less risk. And we might be close to a market panic…